BE.Monthly

ACHIEVING BUSINESS EXCELLENCE ONLINE

MONTHLY EDITION October 2013

standard bank:

setting the standard How Standard Bank plays a key role within Africa’s emerging markets

INCLUDING

Zesco: Repsol Sinopec Brasil: AlpTransit Gotthard:

Included The BE Mining Directory showcases leading mining organisations from across the world, ranging from big corporations to junior mines and their supply chains.

Be seen throughout our portfolio of magazines: • BE Mining Directory • BE Mining • BE Weekly • BE Monthly •

Go to page 216 to see this month’s listing To find out how to get involved contact: vincent@bus-ex.com

business excellence

Business John O’Hanlon Editor johanlon@bus-ex.com Will Daynes Editor wdaynes@bus-ex.com Matt Johnson Art Director mjohnson@bus-ex.com Louise Culling Production Designer lculling@bus-ex.com Richard Turner Director of Sales rturner@bus-ex.com Vince Kielty Director of Editorial Research vkielty@bus-ex.com

Business Excellence brings you content from leading business influencers and strategic thinkers providing inspiration and guidance to help you and your business grow.

We showcase some of the best examples of successful organisations from around the world giving you a unique insight into how they operate.

HINT: For the best experience, click the fullscreen icon

Sharon Rooke Administration & Operations srooke@bus-ex.com Matt Day Head of Technology mday@bus-ex.com Andy Turner Chief Executive aturner@bus-ex.com

Contributors Agnes Bamford Business coach Michelle Drolet Founder of Towerwall Leon Prieto Assistant Professor of Management Simone Phipps Assistant Professor of Management Mark Ingwer Consultant & author George F. Brown, Jr. Consultant & author David Sawyer President of Safer Places, Inc.

Subscriptions & Enquires info@bus-ex.com

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The content of this magazine is copyright of Infinity Business Media Ltd. Redistribution or reproduction of any content is prohibited. Š Copyright 2013 Infinity Business Media Ltd.

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features

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18

12 management

Managing the transition process successfully

The different phases of workplace transition and how to deal with the challenges of a new role.

18 people

22

Creativity, Innovation and Survival

Organizations may be missing an opportunity to leverage HR Best Practices to build a culture of creativity and refine innovative ideas among individuals and groups.

22 operations

Discover what is or isn’t hiding inside the closet

Why opting for comprehensive pre-employment screenings is a worthwhile investment.

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28 strategy

Branded channels, revisited

The advantages of the new Internet-based branded channels are clear: additional advantages will emerge over time.

38 strategy

Emotional Needs: a Business Priority?

How complex Customer Relationship Management (CRM) algorithms are developed to maintain customer relationships.

44 technology

How to expose cyber-attacks and combat threats

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44

The simplest threats still fool off-guard employees, and can go undetected for long periods of time.

48 Shale gas

Shale gas: the game changer

Having been looked at from all sides, the case for shale gas extraction has become irresistible to the countries fortunate enough to have it.

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business showcases

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Mining & Minerals: 54 standard bank

setting the standard

How Standard Bank plays a key role within Africa’s emerging markets and its ongoing commitment to the continent.

64 Caledonia Mining Corporation

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The golden touch

Stefan Hayden, Chief Executive of Caledonia Mining Corporation, explains how a combination of exciting assets and a highly-skilled, passionate workforce and management team have created one of Africa’s leading low-cost gold producers.

76 Middle Island Resources Exploring golden frontiers

Middle Island Resources Limited (MDI) is focused on gold, selecting under-explored territories within West Africa: it is not afraid of commitment, hoping to acquire a producing mine in Niger in order to consolidate its position there.

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84 Allied Mining Services Limited

Bringing the world to East Africa

With a history of 13 years in the mining industry and two generations of experience in the procurement sector, Allied Mining Services Limited continues to be a key contributor to East Africa’s growth.

92 Sino Grinding

Grinding out results

84 92

Pieter Theunissen, Marketing Manager for Africa, and Mark Addison, General Manager of Sino Grinding (Americas) Inc, explain how Sino Grinding became the next global leader in grinding media and how it intends to remain as such.

oil & gas: 100 Leni Gas and Oil (LGO) Delivering growth

Chief Executive, Neil Ritson discusses how, by tapping into Trinidad’s underexploited resource wealth, Leni Gas and Oil (LGO) is fast on its way to becoming one of the premier junior oil companies.

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business showcases

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110 Petróleos de Venezuela, S.A. (PDVSA)

Revolutionary energy providers

Arguably the greatest contributor to Venezuela’s economic and social development, everything that Petróleos de Venezuela, S.A. (PDVSA) undertakes is in the interest of the country’s inhabitants and of maintaining its unique oil sovereignty.

120 Repsol Sinopec Brasil A partnership made in Brazil

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Country Manager, José María Moreno discusses how the coming together of Repsol and Sinopec is bringing huge benefits to Brazil, both economically and socially.

130 Global Sourcing & Supply (GSS) Delivering quality of life where it’s needed most

Global Sourcing & Supply (GSS’s) multi-disciplined approach to business has allowed it to become one of the foremost providers of complete site support services and operations in all of Africa.

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Energy: 138 Endesa

Seven decades of power

One of the world’s leading electric power companies, Endesa is doing more today than ever to provide for the present and future needs of its customers all around the world.

146 zesco

powering zambia

Zesco, Zambia’s national power provider, has been beset by problems, many of them a legacy of under investment and piecemeal growth: but these are now being addressed head on and state of the art technology is the order of the day.

Manufacturing: 154 Henkel South Africa

Sticking to what’s best

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During the course of Henkel South Africa’s history it has consistently displayed a commitment to sustainability and its ever-growing importance to the Sub-Saharan market.

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business showcases

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164 Ghana Rubber Estates Ltd The substance of tyres

With primary exports to the European market, Ghana Rubber Estates Ltd (GREL’s) international footprint and customer base is rapidly expanding.

Transport & Logistics: 176 Port Authority of Jamaica

Ports in a storm

176

Jamaica, always in a strategic trading position in the Caribbean, stands to gain importance following the latest expansion of the Panama Canal: we look at the work of the Port Authority of Jamaica (PAJ) and the implications for the strategically vital Kingston Container Terminal.

186 PortMiami

Welcome to America

Easily accessible to Caribbean and Latin American markets, as well as those of Asia and Europe by way of the Panama Canal, it is easy to see why PortMiami has earned the nickname, the Cargo Gateway of the Americas.

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194 AlpTransit Gotthard AG Crossing new frontiers

Chief Construction Officer, Marco Ceriani, discusses the creation of the New Rail Link through the Alps (NRLA), a project that has been dubbed ‘the construction of the century’.

Construction: 206 Waterfront Toronto Looking over the Lake

Toronto never made full use of its geographic advantage till Waterfront Toronto was created: the makeover will make the city more competitive as well as more beautiful.

BE Directory: 216 Cardno BEC

shaping the future

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218 kengas

reliability in transport BE Monthly

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Managing the tr

succes

The different phases of w how to deal with the ch Words by

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workplace transition and hallenges of a new role

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hange is known to be a major source of stress for most people, which means that no matter how hard you have worked for a promotion at work, or how excited you are by the challenge of moving to an innovative new company, you are likely to find the transition stressful.

There are many variables that influence transition stress, from basic changes in routine to potentially profound changes in how you see yourself and your role within an organisation. Often, much of the focus centres on elements outside of your control, which can make it hard to understand exactly why you feel the way that you do.

The stages of transition The transition period typically involves several phases that most people experience, although the timescale and intensity can vary widely.

“There are many variables that influence transition stress, from basic changes in routine to potentially profound changes in how you see yourself and your role within an organisation” Stage one - firstly, you are likely to experience the ambiguity of initial excitement coupled with anxiety about the new situation. This may be followed by a honeymoon period of discovery and exploration, where people assist you as a newcomer.

Stage two - the first dip is normally a reaction to the environment and an inability to function within it as well as you know that you are capable of. This includes logistical systems and procedures that you haven’t yet learned to manage. After learning to adjust to the new environment and its demands, you will soon function more comfortably and successfully.

Stage three - as you become more involved in the role, you may experience a second dip: an internal reaction as you continue to adjust your behaviour. This is because former behaviours may not be sufficiently effective or generate the expected reaction. However, you should eventually find a way to adapt to the behaviours and norms of the new culture.

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It’s normal to experience these negative emotions, so accept and acknowledge them, whilst focusing on finding the positives and taking action.

Prepare for the challenge ahead The good news is that there are practical strategies that you can use to help manage the anxiety of transition.

The first step is being realistic about the situation that you are entering. This means recognising that transitioning between jobs will almost certainly incur periods of uncertainty and doubt.

However, just acknowledging that this is normal can help you to deal with the situation better. It is also important to appreciate that this is an emotional process, a rollercoaster for some, and therefore not something that you can rationalise your way out of.

Think about how you normally tackle hardship and how you can prepare for these experiences. Difficult situations are often easier to tackle – and may even act as a powerful motivator - as long as you are prepared for them.

Whilst the majority of your attention should be focused on success, it will also help if you are prepared for any

“Difficult situations are often easier to tackle – and may even act as a powerful motivator - as long as you are prepared for them”

negative experiences. It is possible change your mindset and learn how to like being uncomfortable, teaching yourself to enjoy the possibilities offered by tough challenges.

Learning from the past Looking back at other past transitions can help you understand how you may react to change—even if these were other types of transitions such as having children, getting divorced or moving house. Think about a transition that you have faced.

• W hat were the periods of emotional ‘highs’ and enablers of these?

• Similarly, think of the periods of emotional ‘lows’ and what triggered them.

• Reflect on how stress manifested itself during the lows.

• It may be helpful to focus on what helped you to manage this transition.

Now that you have reflected on this past transition, consider the potential implications for your current situation.

What did you learn about yourself that you could apply to your current transition?

Identifying your stressors Another process to help you understand how you may react during the transition is to reflect on what normally causes you stress. Identify the situations, types of people, responsibilities or areas (work and personal) that typically cause you stress. Think about how stress impacts you: what you tend to think, feel and do as a result. Then consider what you can

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“Ultimately, it’s all about committing to the small actions that will have the most impact on creating a positive experience in your new situation” do that will help you to feel balanced and manage stress more effectively, reflecting on what you say or think to deal with these stressors.

10 tips for managing transition stress 1. Knowing what helps us manage transition stress is the first step to a successful transition. Acknowledge and encourage your past successes whilst focusing on going forward.

2. Get into a positive mindset. Reflect on and list the top ten successes in your working life so far. Consider: • W here you have added value to the organisation or people in it.

• W hen you have received praise or recognition.

• W hat has brought you the most enjoyment?

• W hen you have felt positive and satisfied.

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you in this role 12 months from now?

• W hat two things can you do straight away to move towards achieving this outcome?

• I magine a colleague you admire stepping into this role. What would they do in the first month/three months?

5. Look for the positive people in your life. Turn to family and friends for support. Share thoughts and concerns with people you trust who will listen and enable you to talk things through without judgment.

6. Try to make sense of your environment.

Look for logical reasons for why people behave as they do and for why things work differently. Look for the ‘big picture’.

3. Considering the above, identify the main skills/qualities you bring that have enabled your success? Identify ten.

7. Pay attention to the different values, behavioural patterns and communication styles of your new colleagues and respect those differences. How do your beliefs, values and assumptions colour the way you perceive them?

4. Look objectively at your new role: • W hat are the four or five best things about this opportunity?

• W hich of your main skills will be useful?

• W hat would be the best outcome for

8. Be prepared to step outside of your comfort zone. Great learning can occur when you do. Take advantage of your new environment and take reasonable risks.

Get involved in the new community: volunteer, explore and interact.

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9. Pay attention to your physical wellbeing: stay healthy with a well-balanced diet, appropriate exercise and sufficient rest. Feeling physically well will have a significant impact on your ability to deal with new situations and the stress that this can bring.

10. Approach a colleague that you trust who can introduce you to parts of the new culture that you would not otherwise have access to, as well as helping you to make sense of the differences. New colleagues can show you the culture from the inside, as well as helping you to interpret reactions around you and develop effective interaction with others. They can offer feedback and act as a safe sounding board before you take action.

Transition stress is almost inev itable, but w it h preparation it can be managed and minimised. Ultimately, it’s all about committing to the small actions that will have the most impact on creating a positive experience in your new situation.

About the author Agnes Bamford is a partner at executive coaching company The Results Centre and a board member of the Norwegian-British Chamber of Commerce in the UK. Agnes specialises in coaching people through work and life transitions and regularly works with executives from international businesses. She holds an MSc in Business from the Norwegian School of Economics and a PGCE in coaching from the UK. www.theresultscentre.com

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Creativity, Innovation & Survival

Organizations may be missing an opportunity to leverage HR Best Practices to build a culture of creativity and refine innovative ideas among individuals and groups Words by

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Leon Prieto & Simone Phipps

People

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reativity and innovation, although similar and often used interchangeably, have a subtle, yet significant distinction.

Creativity is related to the development of ideas that are both novel and useful, while innovation is related to the application of those novel and useful ideas, thus making them a reality. Both are crucial for a successful organization.

Dr Warren Bennis, a leading management scholar, once said that the organizations of the future will increasingly depend on the creativity of their members to survive. Dr Michael Porter, professor, author, and a prominent expert regarding competitiveness and organizational strategy, affirmed that innovation is the central issue in economic prosperity. In this era of modernization, technological

advancements, and changing markets, the increased use of creativity and innovation is a necessity.

People are the building blocks of organizations, and thus, the success of organizations depends on the ability of individuals and groups to perform their tasks effectively, to conceive and refine creative ideas, and to implement innovative solutions to maximize organizational competitiveness. Therefore, it is important to determine the Human Resource (HR) best practices that promote creativity in individuals and groups, and to find ways to foster their creative vision, so that the organizations for which they work can reap the benefits of their originality and resourcefulness. Here are some of the ways HR can play a role in promoting creativity in the workplace: Hire creative people HR should consider utilizing selection tools that assess a person’s creativity and ability to innovate. It is necessary to hire the best creative minds for various positions within the organization whether it is for Marketing, Research and Development, and Manufacturing.

Creative individuals are an asset to any organization as it positively affects organizational performance.

Employees’ creativity often provides a starting point for successful organizational innovation.

Establish rewards for creativity Employees may experience a heightened level of excitement about creativity and innovation if HR implements policies that will create a sense of friendly

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“The success of organizations depends on the ability of individuals and groups to perform their tasks effectively, to conceive and refine creative ideas, and to implement innovative solutions to maximize organizational competitiveness” competition among employees and offers attractive rewards to those who innovate and create new, valuable products and services for their organization. HR needs to be progressive in offering attractive bonuses and other forms of compensation and rewards to those employees who come up with ideas for new revenue models, marketing strategies and product offerings.

Offer training Many may argue that you cannot train people to be creative. However, studies show that creativity can be learned, and some creativity training programs have proven to be successful. In fact, Georgia State University offers a Certified Professional Innovator program that is designed to help executives build their organization’s internal capacity for generating novel ideas and accelerating profitable growth. Other leading institutions such as UCLA and the University of Miami also offer creativity programs geared towards executives.

If the executive education programs are too costly, HR departments should consider creating their own tailor-made programs geared towards increasing their employees’ creative self-efficacy.

The employees should also be given an

opportunity to transfer what they learned in training, through liberty to innovate in the workplace.

Give employees a greater sense of freedom Companies such as Google and 3M give their employees time (20 percent and 15 percent respectively) to innovate.

These types of initiatives remove organizational barriers and constraints that tend to accompany traditional work. Considering that deviation from the status quo does not always lead to favorable results, it is also important to allow employees who create and innovate to fail without repercussion. In addition, HR should ensure that performance evaluations award extra points to employees who pursue ambitious, creative projects, irrespective of successful or unsuccessful implementation.

About the authors •L eon C. Prieto, MBA, PhD, SPHR Assistant Professor of Management at Clayton State University • Simone

T. A. Phipps, MBA, PhD, PHR Assistant Professor of Management at Middle Georgia State College

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Discover what i inside th

Why opting for compreh screenings is a wort Words by

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David C

Operations

s or isn’t hiding the closet

hensive pre-employment thwhile investment

C. Sawyer, CPP

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I

n today’s world, where immediate access to information is literally at our fingertips, the need for speed can sometimes supersede due diligence, but in the absence of thorough background checks on potential employees, haste can result in waste – and sometimes worse.

Background screening is not a “one size fits all” situation; therefore it is imperative that employers consider the specific risks associated with each position when determining the searches and testing conducted in a pre-employment evaluation. Rule of thumb is the greater the risk involved in a particular position, the more comprehensive the background check.

Healthcare workers, for example, often have unsupervised contact with people in their vulnerable states; as such the risks associated with a “bad hire” could literally be a matter of life and death. And while drug tests have become standard for many posts – regardless of the industry – a typical 9 panel drug test may not be adequate for healthcare employees with access to a large variety of potentially addictive medications.

The financial industry is another where the more background screening done, the better. For someone whose past might involve “creative”

accounting, a position that provides access to revenue may prove to be a temptation hard to resist.

There is no such thing as being too careful when it comes to background screening and as such, at the top of the allowed list of screening sources for most employers is a search for criminal records. That said, there are a myriad of ways to search for criminal records and it is incumbent on an employer to be educated on these screening sources, regardless of whether or not they retain a firm to conduct background searches.

Significant differences exist between a national database search, a real-time county level search and a state repository investigation. Each has its advantages and disadvantages as well as considerable cost differences.

Private databases – even those that claim to be national in scope – have their limitations; in addition the prospective employer is responsible for verifying the information at the original source, which is typically the court.

The optimum place to search for a criminal record is the courthouse where the record originated. A county or federal district court search yields the most accurate and up-to-date criminal record information available and should always be used to verify results from quicker,

“Background screening is not a “one size fits all” situation; therefore it is imperative that employers consider the specific risks associated with each position when determining the searches and testing conducted in a pre-employment evaluation” 24 |

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“Having the correct identification information is vital to conducting a criminal search. People hiding a past they know might prevent them from acquiring employment can be adept at keeping a secret” but often less reliable database searches.

Hav ing the correct identification information is vital to conducting a criminal search. People hiding a past they know might prevent them from acquiring employment can be adept at keeping a secret. In fact, reporting a false date of birth may be enough to elicit a “no record found” on a report, despite the existence of a serious criminal conviction. The potential for harm is palpable if an employee becomes involved in a workplace act of violence, theft or other criminal offense because the employer didn’t have knowledge of past similar incidences.

Without question, the Internet has made the screening process inexpensive, but relying on this method could end in a costly catastrophe. Without knowing what to look for and where to find it, information can be confusing and misleading.

Obtaining a consumer report has become commonplace when conducting a background check on a prospective employee, but be advised that under the Fair Credit Reporting Act (FCRA),

employers must have the written consent of the potential employee before seeking the report.

If a decision is made against hiring the individual based on consumer report i n for mat ion, t he would-be employer is obligated to provide the applicant with a copy of the report and inform him/her of their right to challenge the document. Please note that some states incorporate more rigid rules limiting the use of consumer reports than does the federal FCRA. Legally obtaining accurate, up-todate information is only half the battle.

When a consumer report contains data about an arrest or criminal conviction you must keep in mind Equal Employment Opportunity Commission (EEOC) guidelines when making a hiring decision. A policy that states, in essence, that an arrest or conviction is an automatic disqualifier can quickly lead to trouble with the EEOC. Policies regarding hiring (or not) those with a criminal conviction must be relevant to the position and consistent with business necessity. Thus, a recent conviction for

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Operations

“The importance of conducting comprehensive background screening cannot be overstated. Equally important is the need to fully understand how to legally apply the information contained in a background check report in the hiring decision process” DUI will likely be relevant to a pizza delivery position while perhaps not so with a cashier or receptionist job.

The EEOC updated their longstanding guidance in 2012, strongly suggesting employers take it a step further before making that final hiring decision.

Individualized Assessments are designed to allow each applicant an opportunity to explain extenuating circumstances, underscore rehabilitation efforts or point out similar employment held, post-conviction, with no undesirable consequences. It’s arguably in society’s best interest when ex-offenders are gainfully employed. That doesn’t mean a convicted thief should be hired to work as a bank teller as soon as they are released from prison. The EEOC wants to make sure that a convicted thief can find an appropriate means to earn an honest living and not be automatically branded as unemployable for life. Individualized Assessments are one means suggested by EEOC to make sure your policies are applied evenly and consistently while allowing room for hiring otherwise qualified applicants who have made mistakes in the past.

Employers can find help from various sources to stay out of the crosshairs of the Consumer Financial Protection

Bureau or the Federal Trade Commission (primary enforcers of the FCRA) as well as the EEOC. Check with a labor law attorney to make sure your policies and procedures are compliant and legally defensible. Your background check company should also be able to offer advice about legally obtaining and interpreting the information you need to make sound hiring decisions.

The importance of conducting comprehensive background screening cannot be overstated. Equally important is the need to fully understand how to legally apply the information contained in a background check report in the hiring decision process. Take the time to become familiar with the fundamentals of these vital searches, particularly if the position to be filled is one of trust and high responsibility. It is an investment in time and resources that will prove to be worthwhile.

About the author David C. Sawyer is president of Safer Places, Inc., a full-service firm based in Middleboro, Mass., that specializes in pre-employment screening, security consulting, and tenant screening. www.saferplacesinc.com

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Branded chann

The advantages of the new Int are clear: additional advan Words by

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Strategy

nels, revisited

ternet-based branded channels ntages will emerge over time

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lmost twenty years ago, I had the opportunity to work with a major automotive parts supplier that was looking to significantly expand their business in the repair parts aftermarket.

They saw this as a global opportunity, and one of the assignments I had was to describe the aftermarket environment as it evolved from the then-embryonic markets of countries like China and India to the differentiated markets of southern Europe and Brazil to the highly efficient and organized markets of North America and Japan. The distinctions as you moved along those stages of evolution were indeed many. One of the important ones was a phenomenon which I called the development of “branded channels” in the most mature markets, strong and significant channel organizations (retailers, distributors, etc.) that had achieved levels of power and prominence at least the equal of the major parts manufacturers. In the North American automotive aftermarket, those organizations are familiar to most of us – companies like NAPA, Advance Auto, Pep Boys, and O’Reilly are examples.

“Branded channels” are quite different than “channel brands”. The latter have been around for a long time in most business and consumer markets, historically positioned as the “value brands” at the Good end of the GoodBetter-Best spectrum, targeting the pure price buyer. “Branded channels” are organizations that have developed abilities, attributes and associations linked to the channel itself, as opposed to the products that it sells. When

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successful, the abilities, associations and attributes linked to a branded channel heavily influence the purchase decisions of customers, much as product brand abilities, attributes and associations do.

Several years later, working with a client in the paint and coatings industry, the importance of branded channels was reinforced. As part of this project, I had lengthy meetings with senior executives in a number of the Big Box home center organizations, which had by then become a major force in the North American landscape. One of these executives used the following story to make a point: “Let’s say that next Saturday morning, as you are pouring your coffee, your wife announces that the kitchen needs to be repainted. So after some grumbling and perhaps a few extra cups of coffee, you two get into your car and shortly afterwards, pull into your local [name of his firm’s home center], or perhaps you get lost and by mistake pull into the [competitor home center] lot.

“From our perspective, at that point, as you walk into the store, you’ve made the only brand decision that will matter that

Strategy

“When successful, the abilities, associations and attributes linked to a branded channel heavily influence the purchase decisions of customers, much as product brand abilities, attributes and associations do” day. Whichever of those home centers you walked into, a short time later, you are going to push a cart with paint and other supplies out the door and load it into your car. The odds are extremely high that you will buy paint there, choosing from across the rather rich selection of options and price points that you will find available in that home center.”

My own experience and quite a bit of data accumulated across many industries leads me to conclude that he is right. Once you have made a choice of a channel, be it a retail home center as in that example or an industrial distributor or an office supplies firm or a supermarket, you are extremely likely to make your purchases there.

In discussions with clients, I often give them the following pair of statements in the context of manufacturer-channel organization interactions: 1. “You know how important our product is to you, that our products bring a lot of customers to you.”

2. “You know how important our channel is to you, that our firm attracts the customers that are candidates to buy your product.”

The former of those statements is one spoken by a manufacturing

firm executive to his counterpart in the channel organization. The latter statement is one spoken by the channel organization executive to his manufacturing firm counterpart.

In almost every manufacturer-channel relationship that I have observed, while it’s true that to some extent both statements are true at least on some occasions and for some customer segments, in the vast majority of instances, one of the two statements is far more true than the other. And that “more true” statement is the elephant in the room, the fact that dominates conversations, negotiations, pricing and margins, and relationships.

The former statement is the one that manufacturers make when their product brand is so critical to customers that it is a significant driver of their purchase decisions. Such customers will only consider channels that carry the product they favor.

The latter statement is the one that is made by channel organizations that have successfully made the transition to becoming a “branded channel”.

Their customers will choose among the products that are available from that channel organization. Years ago, I found far more instances in which the former statement was the “more true” one. Today, I find that the balance has

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“The manufacturer knows that if a channel organization has achieved a strong branded channel position, that organization has considerable leverage in negotiations and pricing” shifted considerably towards the latter statement being the “more true” one.

While certainly not the only important factor, the concept and implications of branded channels have become in recent years important factors in both manufacturers’ channel strategy and in the competitive positioning of channel organizations. Some of the reasons for this are probably obvious from the examples above.

The manufacturer knows that if a channel organization has achieved a strong branded channel position, that organization has considerable leverage in negotiations and pricing. Even more concerning, such channels have the ability to successfully introduce other products that compete with those produced by the manufacturer. Many branded channels have in fact done so with their own channel brands and private labels, as anyone visiting a Staples or a Michaels’ can attest, and, in more and more cases, such channel brands are being introduced to compete at the “Better” and sometimes even the “Best” positions on the GoodBetter-Best spectrum.

From the channel organization’s perspective, in numerous discussions, I’ve heard long-term executives say things like “When I first took this job years ago, my positioning strategy was heavily based

on the products that we carried. We tried to build a strong product portfolio and ride on those brand coattails.

But today, all of our positioning is about us. Our in-store service. Our delivery and installation capabilities. Our convenience. Our expertise. Our price commitments. Our loyalty program. It’s all about us, and for our competitors, it’s all about them.

Times have changed.” Another familiar example of this change again draws upon the automotive industry. Not too long ago, every car ad on television or in the newspaper was product centered, communicating why a certain brand of car was the one to buy. Today, you can see a TV ad for CarMax, Auto Nation, or even some of the major “auto malls” that never mention a single make or model, that simply promote themselves as the place to go to buy your next car. Times have indeed changed.

All of the above considerations remain important factors for manufacturers and channel organizations, along the lines briefly outlined above. But my reason for including “Revisited” in the title of

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this article is that significant changes are continuing to occur that make another dimension of the “branded channel” concept one that must take center stage in the strategy decisions of both manufacturers and channel organizations.

My perspective on these changes and their significance was first motivated by the work I have done along with my colleague David Hartman on the changing competitive environment. In a series of articles, we have argued that the future competitive landscape will be dominated by firms from emerging markets like China that have learned in the middle markets of their home countries how to produce “almost-as-good products at a great price point”. Many of these firms have global ambitions, and many are finding that that competency not only enables them to gain market share at home and in other emerging markets, but that it also enables success in the developed markets of North America, Europe, and Japan. It is a global truth that there are large middle market segments everywhere that are attracted to “almost-as-good products at a great price point”. For those that aren’t yet studying the success stories of emerging market firms like Huawei, Mindray, Sany, Haier, and others, we point to the much more familiar success story of Southwest Airlines, another firm that has figured out the “almost-as-good product at a great price point” formula. We believe

that these competitors will become a dominant force in market after market for years to come, even in those industries where they haven’t yet today established a significant beachhead.

One of the factors that will determine the speed and degree of success of firms from emerging markets will be their ability to find channels to market. A few of them got a head start by becoming contract manufacturers for channel organizations, producing to spec the channel brands and private label products mentioned earlier.

More and more of them are taking steps to go beyond that position, to either establish their own product brands or to convert their relationships from contract manufacturers to legitimate suppliers of branded products.

The willingness of channel organizations to embrace such offers is a key determinant of success for such firms, and it is the branded channels that are most likely to be open to such discussions.

I offer another example from the automotive industry. For those old enough to remember, it took quite a while for Volkswagen to establish its position in North America. A bit later, Japanese carmakers like Toyota and Honda also arrived in North America, and while they were more quickly successful than Volkswagen had been, it was still a long climb. More recently, Hyundai moved at what must have appeared as lightning speed to the people from Volkswagen and

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Toyota. As in the earlier examples, there were quite a few forces at work, but I think all would agree that the ability to develop dealer channels was among the important factors in shaping Hyundai’s relatively quick success.

It was far easier for Hyundai to sell the owners of an auto mall on adding a Hyundai storefront than it was for Volkswagen or Toyota to build a dealer base in the era of “Chevy dealers” and “Ford dealers”.

The branded channels, including the auto malls in the above example, have good reason to be open to new suppliers.

They know that it is their own abilities, attributes, and associations that are driving customer purchase decisions, and that they can bring in new product brands (or substitute new product brands for ones previously carried) with relatively low risk. If those new product brands are attractive from the perspective of allowing the branded channel to make more money, they will get a hearing. And those emerging market firms that can produce “almost-as-good products at a great price point” have a very compelling story to tell to the branded channel. The existence of strong branded channels in market after market is among the reasons why we see frequent quick successes for these emerging market competitors.

But that’s just part of the equation in terms of the growing importance of branded channels. In the past, reflecting on the automotive aftermarket and painting

and coating industry examples I provided earlier, all of the players involved were in fact “part of the industry”, or, as one client commented, “were on the usual suspects list”: Sometimes such firms were new market entrants, but in most industries, the new retailers and distributors were a lot like their counterparts already in the industry. Even the Big Box home centers shared a lot of characteristics with longterm industry players like hardware stores and lumberyards. The new entrants (and some evolving long-term players) all had new value propositions that they hoped would propel them to leadership positions, and many of those that have successfully became branded channels did in fact have winning ideas about what to do differently.

That familiar faces and “usual suspects” reality has changed radically.

I think that most business executives, if asked to reflect and come up with a list of the most significant branded channels of today and tomorrow, would come up with a list that includes Amazon, eBay, Alibaba in China, and, in business markets, firms like Amazon Supply and Google

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Shopping for Suppliers. None of these firms were, for most market segments, at least until very recently, “on the list of usual suspects”. But they are now often on the short list of competitive worries for many manufacturers and channel organizations, each with a different set of concerns, but all with concerns that are rooted in the competencies and strengths of branded channels and amplified by the emergence of new firms able to produce “almost-as-good products at a great price point” that have the potential to become the partners of these branded channels, in many cases sharing a similar perspective about pricing.

Manufacturers and other suppliers contemplating meetings with these new Internet-based branded channels know that the elephant in the room will be wearing a banner reading “You know how important our channel is to you, that our firm attracts the customers that are candidates to buy your product.” This is true whether the product to be discussed

is baseball cards (2,829,297 listings on eBay, with the usual suspects (card stores and card shows) on the endangered species list) or nail guns (469 products on AmazonSupply.com vs. 95 shown in the Grainger catalog). The list of such frightening comparisons grows daily.

The power and potential of these new branded channel firms cannot be underestimated. In an earlier article, I cited examples of the appeal that these non-traditional competitors have, drawing upon learning from other market environments, seizing leadership advantages in the use of Big Data concepts, developing best-in-class logistics capabilities, developing Internet tools that offer a superior customer experience, and putting together a supplier base and business model that enables them to not only compete on price, but that in many instances denies the old adage “Better, Cheaper, Faster – Pick Any Two”. I have talked with many customers of these new branded channel competitors that have said “I didn’t have to choose, they gave me all three”. These firms are not just building upon the branded channel concept. They are in fact in many ways redefining it.

For quite some time, I have believed that the branded channel phenomenon is one that is critical to strategy and competitive positioning, for both manufacturers and

“For quite some time, I have believed that the branded channel phenomenon is one that is critical to strategy and competitive positioning, for both manufacturers and channel organizations” 36 |

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“Most of the manufacturers and channel organizations that I work with are still debating whether these new branded channel participants in their markets are friend or foe” channel organizations. My “revisited” perspective not only reinforces that belief, but raises it higher on the list of themes that must be addressed in order to ensure future success.

Most of the manufacturers and channel organizations that I work with are still debating whether these new branded channel participants in their markets are friend or foe. There are already enough examples to allow a quick answer of “both”, but I see more and more examples that fall on the foe side, despite some friendly offerings such as eBay’s stores and Amazon’s thirdparty marketplaces. Many of the foe examples that I see achieve that status by a combination of the ability of these new branded channel entrants to own end customer relationships, their out-in-front competencies in areas like Big Data and best-in-class customer experience, and their ability to win on price. In the future, I think more foe outcomes will occur as these new branded channels pair with new suppliers that offer “almost-as-good

products at a great price point”, making the price competition even more intense for the “usual suspects”. The advantages of the new Internet-based branded channels are already clear, with many examples already visible. The additional advantages that will be built upon relationships with emerging market suppliers are ones we will see more and more often in the future, rather than significant current realities.

I think that over time, examples will surface in different industries and for different customer market segments that will fall into both the friend and the foe categories, but to me, that possibility further underscores the need to figure out how these new branded channels fit into strategy and go-to-market plans, identifying those situations in which they can make a contribution to growth and profitability as a friend and those other situations in which a response is required to avoid losing badly to a powerful new foe. My advice is to put that consideration high on the planning agenda.

About the author George F. Brown, Jr. consults with industrial firms on growth strategy. He is the coauthor of CoDestiny: Overcome Your Growth Challenges by Helping Your Customers Overcome Theirs (Greenleaf Book Group Press of Austin, TX) and the cofounder of Blue Canyon Partners, Inc. George has published frequently on topics relating to strategy in business markets, including articles in Industry Week, Industrial Distribution, Chief Executive, Business Excellence, Employment Relations Today, iP Frontline, Industrial Engineer, Industry Today, and many others.

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Emotiona a Business

Many companies talk about the need to e customers. Some compile complex Custo algorithms to develop and m Words by

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al needs: Priority?

establish strong ‘relationships’ with their omer Relationship Management (CRM) maintain these relationships

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he concept of customer relationships makes sense in the context of meeting personal needs. As in all interpersonal relationships, from friendships, to marriage, to company and client, trust and the promise of mutual benefits are the foundation for growth and development. When we put others’ needs first in relationships, we’re more likely to make those relationships work.

After decades of formally documenting the stages of business-customer relationships, we’ve learned that many companies become complacent in their endeavor to understand, satisfy, and embrace the emotional needs of consumers. Companies understand the meaning of relationships, but rarely consider what it takes to make their audiences’ needs a priority. They seemingly cross their fingers hoping that what brought customers to their company will cause them to be loyal. Just as in most human romantic relationships, businessto-consumer relationships fall apart when one party (the business) fails to track the evolving needs of the partner (the consumer). The challenge of sustaining long-term value pushes businesses toward considering short-term relationships as the easiest route to profits.

Indeed, if a department attracts

new customers, it wins the lion’s share of the marketing budget, but it is well documented that it costs some companies five to ten times more to attract new customers than to retain an existing one.

On the other hand, if companies sustain relationships with existing customers, a mere five percent decrease in annual defections can lead to a 25 percent to 125 percent rise in profits. Another way of crystallizing these figures lies in a social reality of the Internet era. When we are satisfied with a product or service, we may tell three friends, but when we are dissatisfied, we’re inclined to tell (or Tweet) it to three thousand.

Even when brands claim to desire lifetime relationships with customers, many tactically distance themselves from the humanity of their interactions.

The systemic nature of marketing strategy depersonalizes their audience by using language that groups customers into segments and targets. People are commonly referred to as ‘buyers,’ ‘shoppers’, ‘payers’, ‘non-responders’, ‘early adopters’, and ‘eyeballs’. What is too often lost is the nuance - human.

The routine marketing logic follows a self-sustaining strategy: measure category and purchasing behaviors, shoot a creative mix of emotionally salient messages and rational pleas at the targets, place all

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“Customer relationships, like interpersonal relationships, are built on trust. And if trust is lost, the relationship is lost as well” bets on marketing science, and presume the targets can’t help but consume. But if we truly view consumers through the lens of relationship dynamics, we’ll learn that, whether we are working, shopping, or engaging with friends and family, our psychological needs are a constant driving force. Understanding and putting this into practice strategically will eliminate the artificial two-way mirror between daily life experiences and the ways businesses communicate.

The powerful role of trust Customer relationships, like interpersonal relationships, are built on trust. And if trust is lost, the relationship is lost as well. Marketing scholars Jennifer Aaker and Susan Fournier reveal how closely business relationships and interpersonal relationships mirrored each other in an Internet-based psychology test. Over a two-month period, the researchers measured the evolving strength of their relationship with customers as they were introduced to an online film processing and digital library business.

The participants were told they had been selected for a pilot program before the business was to be opened to the public.

They were told to take pictures and use the website’s services at their pleasure, evaluating the experience along the way. Some participants interacted with a version of the website that used exciting,

amped-up marketing language. Other participants engaged with a company that was more down to earth, personalized, and directed at forging a sincere dialogue.

The sincere company Aaker and Fournier found that relationships with the ‘exciting’ company had the trajectory of a short-term fling, while those involved with the ‘sincere’ company developed a relationship that deepened over time. The sincere, relationship-oriented business had raised consumer expectations of the service quality and built loyalty to the website. If the company delivers as promised, there is no question that the personal touch will keep customers invested in the experience for a long period of time Yet there is one caveat to the research that speaks to the irony and complexity of consumer decision-making. When the researchers imposed an unexpected service failure within the experiment, for example, “Sorry, but we lost all your film!” relationships with the users interacting with the sincere business were harmed the most. Why? Because when a business promotes itself as an earnest entity that truly cares about its customers, and then fails to deliver on those expectations, it does more harm than simply not delivering.

“Trust is much heralded in marketing, but it has a downside,” said Aaker in an interview for Stanford Graduate School

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of Business (GSB) News. “What needs to be understood and managed are the contracts, norms and rules that underlie the relationship between a consumer and brand, and how a brand’s actions fit or violate those norms.”

Businesses must re-establish the emotional trust that is destroyed when they transgress, be committed to following through on promises, and be prepared to stand by that attitude when crisis strikes. In the days following the British Petroleum (BP) oil spill, how many times did we hear executives tell the public not to worry? While Chief Executive Officer Tony Hayward haplessly expressed how much he’d “like his life back,” BP was writing a 187-page legal report that pointed fingers at thirdparty contractors, tacking an asterisk to every apology. Perhaps they should

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have known that what won’t work with a friend or loved one won’t work for an angry public either.

The deceit of satisfaction On the surface, one might think that meeting needs is purely about satisfying the consumer. It’s hard to deny that sentiment but what needs to be done is a realigning of the definition of satisfaction with what makes us deeply satisfied.

Of course, companies are trying to interpret and meet emotional needs but it is questionable whether traditional consumer research methodology is capable of measuring true need satisfaction.

Consider these two points: • Roughly 80 percent to 90 percent of new products and services fail or drastically fall short of sales expectations in their first year.

Strategy

• Customer satisfaction is used by 90 percent of companies as a benchmark for success. Overwhelmingly, most companies report that their customers like their products just fine.

What’s at play with this apparent contradiction? One reading of the product failure data is that there are too many products in the marketplace. And, in most cases of failure, advertising and marketing efforts aren’t successfully connecting emotionally with consumers.

But the customer satisfaction benchmark is confounding. If everyone says they are satisfied, why do most new products fail?

Surveys fail to predict repurchase As it turns out, positive consumer satisfaction surveys are neither a predictor of repurchase nor an indicator of whether emotional needs are met. Most companies go only so far as to ask whether their clientele is satisfied with their ‘experience’: most customers say yes. The marketers congratulate themselves, only to find later that the same ‘satisfied customers’ went elsewhere the next go-round.

Again, the mental process that occurs during a customer satisfaction survey is typically a rationalization of past experience. The brain quickly evaluates

“If a business is going to learn about an emotional issue, it needs to study the issue with a method sensitive to emotion” the individual’s expectations of the product, and if they were in the ballpark, the product is checked “satisfactory.” A one-time purchaser of an electronics brand may never tell a researcher, “It worked well enough. I was satisfied. But the design and overall feel just didn’t enhance my deep-seated feelings of identity and autonomy.” The consumer may have appreciated the product, but if his or her unarticulated emotional needs went unmet, the appreciation means virtually nothing for a business trying to form a base of loyal buyers.

This is a problem for businesses using a logical, traditional process to study the emotional issue of satisfaction. If a business is going to learn about an emotional issue, it needs to study the issue with a method sensitive to emotion.

At the end of the day, businesses must see their customers as individuals who are always striving for a healthy sense of self-identity.

About the author For 25 years Dr. Mark Ingwer has applied his psychological and marketing acumen to help companies optimize brand strategy based on understanding customers. He has worked with diverse companies across numerous industries, with a special focus on consumer packaged goods, healthcare, and advertising. Ingwer is the author of Empathetic Marketing: How to Satisfy the 6 Core Emotional Needs of Your Customers (Palgrave Macmillan 2012).

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How to expose cyber-attacks & combat threats The simplest threats still fool off-guard employees, and can go undetected for long periods, all the time draining company data: the only defense is constant vigilance Words by

Michelle Drolet

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ybercriminals are employing more sophisticated techniques all the time and far too many companies and organizations still don’t have the protection they really need to safeguard their systems.

The prevalence of targeted attacks and advanced persistent threats (APTs) is disturbing.

The risk is that security is breached, typically through manipulation of employees using a technique such as spear phishing, and existing security systems are unable to detect the attack. Data can be harvested for many months, or even years, before the breach is discovered.

According to a white paper from the Enterprise Strategy Group, 59% of enterprise security professionals believe their organization has been the target of an APT, and 40% of large organizations have invested in various new security technologies as a direct result of APTs. How do they get in?

Penetration may be achieved stealthily, typically with a targeted attack on an employee. The cybercriminal will gather data online, with social network accounts proving to be a particularly rich source. According to Trend Micro research spear phishing is the preferred

method, accounting for a staggering 91% of targeted attacks. The employee targeted will receive an email that appears to come from an organization like LinkedIn, and if they trust the content, they’ll follow the link within to a fake website where they may be tricked into allowing a cybercriminal to gain remote access to their computer.

Once the attacker has access to one employee’s computer they can use it to gain remote access to devices belonging to other employees in the organization.

The threat has spread dramatically and traditional security tools will be none the wiser. Provided the attacker is careful to keep the data theft slow and steady, with frequent small file transfers rather than a big data dump, there’s little chance that it will be picked up by existing security systems.

How do you catch them?

The idea is to analyze downloads and network payloads in order to expose potentially malicious communications.

It’s about detecting malware or human intrusions into your system by paying close attention to the addresses of any communication. Does the external location for a file transfer make sense?

Does the address have a bad reputation?

Are the SSL certificates legitimate?

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“Targeted attacks are still on the rise. As governments and large organizations begin to take action and get a handle on the threat, there’s a real risk that many cybercriminals will look for easier prey” It’s important to expose suspicious internal communications as well. Is there any reason that a specific employee’s computer should be the source of a remote desktop session on another employee’s device? A proper analysis will flag suspicious behavior and allow the IT department to assess the threat and take action to close it down.

Keep your guard up The nature of this threat dictates the need for constant vigilance to keep the cybercriminals out. Shut down one route and they will continue to explore other avenues of access, the more obscure the better. There are many potential penetration points to consider. Activity must be analyzed across the entire organization and you need real-time information on potential attacks and known malicious sources.

How about blocking suspicious URLs and web-based content to stop penetration from the outset? Do you have application firewalls or database security? It’s also wise to ensure that you have data encryption technology in place; far too many companies focus on a Maginot line defense, pouring resources into defending against external attacks and forgetting that if attackers do gain access they can circumvent this security

from within. Is your user authentication stringent enough?

How do you know you’ve caught them?

One of the most worrying aspects of APTs is that advanced attacks typically go unnoticed for over a year. You may be locking the stable door after the horse has bolted. That’s why an analysis of internal traffic is so vital. Suspicious behavior must be followed up and investigated.

In the longer term you want to reach beyond identifying and blocking attacks to unmask the criminals responsible so that you can share intelligence to nullify their threat.

Targeted attacks are still on the rise.

As governments and large organizations begin to take action and get a handle on the threat, there’s a real risk that many cybercriminals will look for easier prey. Don’t allow your company to be an easy target.

About the author Michelle Drolet is founder of Towerwall, a data security services provider in Framingham, MA with clients such as PerkinElmer, Smith & Wesson, Middlesex Savings Bank, Brown University and SMBs. You may reach her at: michelled@towerwall.com

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Shale gas: The

Having been looked at from all sides, become irresistible to the countr Words by

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Shale gas

game changer

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lassed as unconventional gas along with coalbed methane and so called ‘tight’ gas, shale gas is fast heading out of that category. In the USA it has already had a significant and irreversible effect on the economy, as evidenced by a recent report from consulting firm IHS which says the boom in domestic energy now directly or indirectly supports 1.2 million jobs and adds more than $1,200 to average disposable income – and that these figures will increase to 3.3 million jobs and $2,000 per household by 2020.

Technologies like hydraulic fracturing and horizontal drilling, which make it practical to recover previously unused oil reserves, have helped drive a 58 percent increase in natural gas reserves since 2007, cut the price of natural gas by nearly three-fourths, and sparked more than $120 billion in US based investment last year, according to the report.

With 665 trillion cubic feet (tcf) of technically recoverable shale gas (that is, gas accessible with current technology) the USA comes in fourth behind China, Argentina and Algeria, according to The United States Energy Information Administration (EIA). For the USA, though, the principal benefit is that shale gas looks like finally severing its dependence on imported hydrocarbons.

Whether it’s in the UK, China or South Africa, all this upside depends on the use of hydraulic fracturing.

Fracking has to be a contender for the most emotive word of 2013. On the one hand it could be a solution to the world’s energy problems, at least in the short term and potentially the stopgap that will allow us to enjoy cheap energy until the utopia of renewable self sufficiency makes fossil fuel a bad memory. On the other it will kill vegetation, pollute water sources and accelerate global warming. The famous earthquakes are the least of the publicly-aired problems.

However it is not a new technology, in fact dating back to the late 1940s.

Fracking has a lot of advantages over conventional O&G development because it has a low surface impact, and once a well has been drilled it will go on producing for decades with very little maintenance. The tremors, if felt at all, will be insignificant to those associated with ‘retreat’ coal mining which has left its mark on the English Midlands. Environmental hazards are more serious, with the possibility of watercourse pollution and the escape of gas to the surface. With clear regulation and the adoption of well understood practices by the industry it should be possible to avoid the problems that have been reported in the USA.

“If the revolution continues in the US and extends to the rest of the world, energy consumers can anticipate a future dominated by cheap gas” Paul Stevens

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Cuadrilla operations at Anna’s Road in Lancashire

Shale gas

“Shale gas could potentially meet a third of the UK’s gas demand with a very small surface footprint, benefiting the environment at the same time” IoD The USA is becoming the benchmark for other countries fortunate enough to have significant shale gas reserves.

The EIA made a first pass estimate of a technically recoverable resource of 485 tcf of gas in South Africa’s Karoo Basin shale beds. Exactly how much of this is recoverable is not certain, but drilling and geophysical surveying is going ahead. As Mthozami Xiphu, Executive Director of the South Africa Oil & Gas Alliance (SAOGA) points out, even if the Karoo reserves amount to no more than 20 or 30 tcf their significance would be massive. “If we get a hundred or multiples of a hundred tcf we are looking at a game changer for energy in South Africa over the next ten years!”

In the UK, according to an Infrastructure for Business report published this year by the Institute of Directors (IoD), “shale gas could represent a multi-billion pound investment, create tens of thousands of jobs, reduce imports, generate significant tax revenue and support British manufacturing. It could potentially meet a third of the UK’s gas demand with a very small surface footprint, benefiting the environment at the same time.” This on a very conservative estimate of UK reserves (see Francis Egan’s comments) at between 853 and 1,389 billion cubic feet (bcf). The IoD

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foresees 74,000 UK jobs supported by the industry; and “just as importantly, shale gas could support jobs in the chemical industry and wider manufacturing by providing secure energy and important feedstocks. This could help the UK to make more. In the US, PwC and Citi have estimated that at least one million new manufacturing jobs could be created over the next decade.” Britain would also share America’s energy security, with dependency on imports reduced from 76% to 37% in 2030, while the cost of net gas imports in 2030 could fall from £15.6 billion to £7.5 billion (using 2012 prices).

Energy security is as important as energy cost – though there’s no telling how disrupting the finely balanced global O&G markets will impact global political relations. In a Chatham House report The Shale Gas Revolution: Hype and Reality published at the end of 2012 Professor Paul Stevens warns that the US ‘shale gas revolution’ has created huge uncertainties for international gas markets. “If the revolution continues in the US and extends to the rest of the world, energy consumers can anticipate a future dominated by cheap gas.

However if it falters and the current hype about shale gas proves an illusion, the world will face serious gas shortages in the medium term.”

The case for UK shale gas Words by Francis Egan

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he potential to extract natural gas from shale onshore in the UK is an opportunity that goes beyond helping to secure Britain’s gas supply. This valuable resource can create jobs and provide economic benefits on a local and national scale.

The British Geological Survey recently published its estimate for the potential amount of shale gas in northern England, saying that there is 1,300 trillion cubic feet stored within the Bowland Shale Formation. If we can extract just ten per cent of this resource, it could meet the UK’s current gas demand for more than 40 years. Furthermore, at today’s gas prices, this recoverable ten per cent would have a market value of almost £1 trillion. With tax revenues from North Sea production in decline, Deloitte predicts a fall from £11.2 billion in 2011-12 to £3.7 billion in 2017-18, onshore gas production will help fill this gap by providing valuable funds to the Treasury.

The United Kingdom needs sustained economic growth of which job creation will play a key part. The Institute of Directors, in its recent report ‘Getting Shale Gas Working’ predicted that shale gas development could create 74,000 new jobs, spanning a wide range of disciplines including geology, drilling, accounting, IT, construction and many others.

The UK has the engineering, health, safety and environmental expertise, together with a robust regulatory

framework, to develop its shale gas resources in a safe and responsible fashion. We have a great opportunity to become a world leader in shale gas development as long as we successfully tackle the unfounded scare stories concerning hydraulic fracturing. And Britain too would enjoy a huge energy security dividend.

Finally local communities will also benefit financially from potentially transformative funds in areas of shale gas production. Communities will receive £100,000 for every exploration well site that is hydraulically fractured in addition to one per cent of revenues from future shale gas production. This could equate to over £1 billion over a 20 to 30 year production timescale in Cuadrilla’s Bowland Basin licence area alone.

The business case for the safe, responsible and effective extraction of shale gas is solid and can generate real and long-lasting benefits for the UK. We need to get on with the job in hand of understanding exactly how much natural gas stored in shale rocks thousands of feet underground can be viably extracted.

Francis Egan is CEO of Cuadrilla Resources, an independent UK energy company led by a team of experts in unconventional sources of exploration. www.cuadrillaresources.com

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standard bank

the Setting

standard How Standard Bank plays a key role within Africa’s emerging markets and its ongoing commitment to the continent

edited by: will daynes research by: richard Halfhide

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A gold wagon outside an early Johannesburg branch of the bank in 1895

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he First Quantum Minerals (FQM) story began in the late 90s and spans humble beginnings from a tailings retreatment process at Bwana Mkubwa in Zambia, to its present day achievable aspiration to be one of the world’s leading copper producers. The financing and development of Kansanshi marked the transition of the company to a fully fledged miner and the beginning of a spectacular growth story for the company over the last decade. Following the Kansanshi success, FQM expanded their footprint through the African Copper belt, the African continent and then on an international scale as the company diversified into Nickel and acquired Kevitsa and Ravensthorpe. Acquisitions continued with the Antares, Haquira Project in Peru and the most recent widely publicised Inmet acquisition, including the large scale Cobre Panama Project.

FQM growth story and Standard Bank support Standard Bank has partnered with the company throughout this story with a relationship dating back to the initial financing of the company’s flagship Kansanshi Project – Africa’s largest copper mine and the world’s eighth largest copper mine today. In December 2003 Standard Bank, as a Co-Lead Arranger and Underwriter, signed a $120 million export credit and commercial debt facility for the development of Kansanshi. Vaughan Wickins an Executive in the bank’s Mining and Metals teams comments, “the Kansanshi financing was a landmark transaction as it was the first

mine financing in Zambia done on a project finance basis. Standard Bank was confident to underwrite the senior loan which included the Export Credit Insurance Corporation of South Africa. The financing structure also incorporated an asset finance, overrun and power line cost element, however the senior loan facility was ultimately awarded the Project Finance Magazine Mining Deal of 2003 – Africa”. In addition to the senior loan support, Standard Bank signed a $6 million short term facility to finance the company’s capital contribution to ZESCO (the Zambian power utility), providing for the construction and installation of a transmission line and new substation to connect Kansanshi to the ZESCO power grid.

In October 2006, Standard Bank was a lender to the $400 million corporate facility that enabled the refinancing of the Kansanshi facility and financing for the company’s additional projects and general corporate purposes. By the end of 2006, FQM had four African assets including Kansanshi, Bwana Mkuba/Lonshi, Frontier Copper in the DRC and Guelb Moghrein in Mauritania.

2008 was a busy year for FQM. The company acquired Scandinavian Minerals and the Kevitsa nickel-copper-PGE project in Finland - one of the world’s largest undeveloped, sulphide nickel deposits at the time - and later in the year announced the acquisition of BHP Billiton’s Ravensthorpe nickel operation in Western Australia. FQM was advancing its plans to become one of the world’s leading nickel producers. Following a decision to commence development of the Kevitsa Project, Standard Bank was again

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mandated as a lead arranger on a $250 million debt facility to fund development.

Standard Bank Growth Story Standard Bank is the largest bank in Africa with over 150 years of operating history on the continent and employs more than 50,000 people worldwide. The bank operates in 18 countries in sub-Saharan Africa and is building Africa’s leading financial services organisation.

Africa is expected to benefit from sustained economic growth in the decade to 2020.

Standard Bank with its on-the-ground presence and unmatched knowledge of Africa’s economies, resources, clients and communities, is uniquely positioned to ride the wave of the African growth story.

Standard Bank operates around 550 retail branch outlets outside of South Africa and

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plans ongoing investment in its operations across the rest of Africa. Including South Africa the bank currently operates around 8,500 ATMs across the continent.

The strategic partnership with its 20 percent shareholder, the Industrial and Commercial Bank of China, has proved rewarding. In 2008 the $5.5 billion investment was the largest foreign investment into South Africa and largest foreign investment by a Chinese bank internationally. The transaction marries China’s appetite for commodities with Africa’s vast resources and Standard Bank’s expertise on the continent.

Standard Bank’s achievements have been acknowledged across the industry, with the bank recently being named as Best Investment Bank in Africa by Euromoney. The award adds to Standard Bank Group’s list of accolades received in 2013, including winning eleven

Standard Bank ‘EMEA Finance Achievement’ awards; the ‘African Deal of the Year’ award for Konkola Copper Mines financing in the 2013 Project Finance Deal of the Year Awards; ‘Commercial Deal of the Year’ in the 2013 Trade & Forfaiting Review; and being named ‘Best Trade Finance Bank in Africa’ by Global Finance.

Mr David Munro, Chief Executive of Standard Bank Corporate and Investment Banking said, “Our clients are at the heart of everything we do. We have a unique footprint and physical presence across Africa, global connectivity to serve Africa, unique sector expertise with a specialisation in natural resources and a talented team, all of which reinforce our position as the leading financial services organisation on the continent.”

Standard Bank’s mining and metals expertise Standard Bank’s focus on resources is supported by the vast potential of the African continent. It is an institution steeped in mining history with its head office situated in the South African gold region of the Witwatersrand in the Gauteng Province. There are not many institutions that can have their employees look out of the head office windows and see mining headframes in the distance.

Commenting on the bank’s support for First Quantum and its mining pedigree, Mr Wickins says “FQM’s experience and track record in successfully developing and operating complex projects has set them apart from other miners. It remains a key aspect that has underpinned Standard Bank’s ongoing support for the company.

It is a similar focus on technical expertise along with our track record that has seen Standard Bank finance the majority of new copper mine developments in Africa over the last decade, this includes financing for FQM, KCM, Equinox, Discovery Metals and Metorex. “ The mining and metals sector is high risk with the challenges only exacerbated in the current climate of falling commodity prices. At times like these it’s important for companies to partner with banks that have

“Standard Bank’s focus on resources is supported by the vast potential of the African continent” Be monthly | 59

a long term commitment to the sector and the continent. Mining and metals remains a core business for Standard Bank and its comprehensive service offering includes providing innovative and flexible financing, advisory, trading, ECM and treasury solutions to clients. The bank’s mining and metals team includes extensive technical expertise with individuals ranging from the various disciplines of mine engineering, geology, metallurgy and process engineering. We are able to leverage this in-house technical expertise and track record of successfully executed transactions to assist clients achieve their development objectives. The Bank’s network of offices in all the major mining regions of the world enables it to provide analyses of global commodity trends and to stay abreast of local developments.

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As part of the bank’s expertise in supporting the mining sector, Standard Bank is currently the leading ECM platform in Africa, closing twelve transactions in 2012 with a deal value in excess of $2 billion and being awarded Euromoney’s 2013 award for Best Equity House in Africa.

Additional product support to FQM While the funding support Standard Bank has provided to FQM has been an important aspect in assisting the company’s growth plans, the bank has also been a long standing provider of day to day banking support in Zambia, including provision of new ATMs and branches as well as situating bank staff on the client’s premises. The Bank’s FX trading teams situated in Lusaka, Johannesburg, NY and London offer real time market views and

Standard Bank

“Standard Bank is currently the leading ECM platform in Africa, closing twelve transactions in 2012 with a deal value in excess of $2 billion” trading solutions to mitigate currency risks and ensure efficient operational management.

In addition to transactional and FX support, the bank has an established capability in commodity trading, notably in the African copperbelt. Steve Reece Head of Base Metals Trading at Standard Bank commented on the physical trading environment in the region: “Standard Bank has actively supported mining companies in the region and established an impressive physical commodity capability over the last ten years. Our support to miners includes the ability to act as an offtaker and take physical Cu metal in a variety of forms including everything from concentrate through to LME grade copper cathode.

In addition we have provided short term working capital support linked to physical offtake solutions. In the case of FQM and various other miners, providing short dated QP hedging lines has assisted the miners in managing their near term commodity price exposure, whilst the provision by Standard Bank to many miners of longer dated lines has helped those miners provide their debtholders and shareholders with price security in extremely volatile times” FQM has a good understanding of commodity sales and marketing, following the acquisition of the trading company,

Republic House in 2010. The marketing and sale of the company’s copper production is handled by Metal Corp Trading, the separate entity it established following the acquisition.

Standard Bank’s strength in global commodity trading is supported by 24 hour coverage of spot, forward, options and other derivative instruments in precious and base metals as well as capability in iron ore and other metals.

Standard Bank in Zambia In Zambia, Standard Bank trades as Stanbic Bank and was established in 1992 offering Personal and Business Banking, Corporate and Investment Banking and Wealth Management.

The Bank has 22 branches spread across the country, including the Copperbelt and North Western Province, with 48 ATMs all equipped with VISA facilities. The bank has invested significantly in growing its capacity in Zambia across both these provinces.

Standard Bank’s Corporate and Investment Banking business in Zambia serves a wide range of client requirements across banking, finance, trade, risk management and advisory services. The division has built a deep understanding of the market dynamics in Zambia and maintains a specific focus on industry sectors that are

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“The work done in Zambia, South Africa and the UK has added significant value to the client and increased the strength of the relationship” most relevant to Zambia and have a strong local value proposition, including mining and metals, telecommunications, power and infrastructure, agribusiness and financial institutions. The local team is able to provide clients with relevant experience and deep insight into the local commercial and regulatory environments.

For both FQM and Standard Bank, Zambia remains an important country of focus.

Standard Bank’s strong presence in Zambia means the bank is well positioned to continue supporting FQM’s Zambian growth strategy.

FQM’s current assets in-country include a strategic investment in Mopani Copper Mines (whose assets include the Mufulira mine, smelter and refinery and the Nkana mine, concentrator and cobalt plant), the expanding Kansanshi Project, construction of a copper smelter at the mine, and the Trident Project incorporating Sentinel (Copper), Enterprise (Nickel) and Intrepid (Uranium).

In terms of location, the flagship Kansanshi mine and Project Trident are situated in the North Western Province of Zambia some 15 kilometres and 150 kilometres west of Solwezi, respectively. Solwezi has quickly grown into a major mining centre serving the aforementioned projects as well as Barrick Gold’s Lumwana mine. The area is

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capable of producing well in excess of 1 M tonnes per year of copper as well as other by-product metals including gold. The region has become an increasingly important province for the country.

The Trident Project will be built around a new urban development, Kalumbila, in the North Western Province and the Bank has been at the forefront of providing financial services and support to FQM, notwithstanding the relative infancy of this particular initiative.

We are providing a temporary drop-down ATM solution whilst the town and mine are being constructed. Once operations begin in earnest, the Bank shall open a full-service branch at the mine to ensure access by the company to the best commercial banking services possible and minimal disruption to operations at the mine.

Over the last two years, Zambia has introduced significant and far-reaching regulatory changes. Several of these have presented challenges to businesses including FQM, as one of Zambia’s largest tax payers.

Statutory Instrument 55 (Monitoring of Balance of Payments), introduced in July 2013, has required significant operational planning and adjustments. Standard Bank set about understanding the implications of the new regulations and in collaboration with

Standard Bank

FQM and the regulator, formulating solutions and human capital support to guide the client through the process. The work done by the Bank in Zambia, South Africa and the UK has added significant value to the client and increased the strength of the relationship.

Particularly noteworthy, underlying the unique relationship that exists between the two businesses is the decision to commit part of the Bank’s headcount solely to FQM at Kansanshi as a result of SI55.

Stanbic Zambia continues to service a number of the other major miners in-country, including Barrick Gold and Vedanta Resources.

More recently the Standard Bank Group won Project Finance magazine’s 2012 African Mining Deal of the Year for the $700 million project funding for Konkola’s development of the Konkola Deep Mining Project.

Paul Richards, Head of Corporate and Investment Banking at Stanbic in Zambia said, “We are African in ethos and culture. I personally take much pride and comfort from

one of our more recent strap lines, which I think describes in two short sentences the essence of our Bank. “They call it Africa. We call it home”. We aim to build the leading African financial services organisation using all our competitive advantages to the full. We will focus on delivering superior sustainable shareholder value by serving the needs of our customers through first-class, on-the-ground operations in chosen countries in Africa. We will also connect other selected emerging markets to Africa and to each other, applying our sector expertise, particularly in natural resources, globally” It is a testament to the Zambian Government’s commitment to supporting the mining sector that FQM has had the confidence to commit to its large scale development plans in the country. Following commissioning of Sentinel and further Kansanshi expansions, FQM will initially be targeting annual copper production in Zambia of approximately 700,000 tonnes per annum. Planned capital expenditure in-country will be in the order of $3.4 billion.

Africa is a key focal point for growth within the emerging markets and Standard Bank plays an important role in continuing to support development, leveraging its people, expertise and track record. Standard Bank’s commitment to the continent and the sector is evident - “They call it Africa.

We call it home”.

For more information about Standard Bank visit: www.standardbank.com

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The golden

touch

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Caledonia Mining Corporation Stefan Hayden, Chief Executive of Caledonia Mining Corporation, explains how a combination of exciting assets and a highly-skilled, passionate workforce and management team have created one of Africa’s leading low-cost gold producers

written by: Will Daynes research by: Robert Hodgson

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No 2 Conveyor discharging onto stockpile at twilight

Caledonia Mining

W

ithout beating around interest in the Blanket mine in Zimbabwe, the bush, the gold which produced over 45,000 ounces of gold in industry as it stands 2012, and a 100 percent interest in the Nama in mid-2013 is under base metals exploration project in Zambia.

The Blanket gold mine re-started pressure and not just when it comes to the recent falls in gold price. production in April 2009, following a This pressure also stems from issues including temporary six month shut-down during the resource nationalism, labour concerns, testing times before Zimbabwe changed political and legislative uncertainty, and its currency to the US dollar, and has been increased environmental requirements. With expanded since to significantly increase these factors having an increasing influence production capacity to 48,000 ounces on the financial performance of gold mining of gold per annum last year. Last year operations in core markets like Africa it is Blanket was the first mining company to all the more important to comply with the Zimbabwe Indigenisation Legislation. recognise the achievements of those businesses that are Meanwhile the recently not only weathering the reconstituted Blanket board have also approved a four storm, but prospering in difficult conditions. year growth strategy for Ounces of gold per “While the drop in the the mine. Estimated to annum achieved by gold price we have seen in cost a total of $37 million Blanket in 2012 recent times now appears the investment programme will be funded from to be recovering slightly, we have remained profitable at these Blanket’s internally generated cash considerably lowers levels, this at a time is expected to result in progressive when much of the industry has been sub- increases in gold production to approximately economic,” states Stefan Hayden, Chief 76,000 ounces in 2016.

Executive of Caledonia Mining Corporation.

As it stands at the time of writing the “We have done so by controlling our costs Blanket mine extends over three kilometres. and the efficient use of labour we have Current work on the asset includes the sinking trained and been able to retain. This has of the new No. 6 Winze shaft. This shaft will allowed to maintain our position as one travel down to the mine’s current production of the lowest, if not the lowest cost listed level of 750 metres and continue down to producer on the African continent and one approximately 1,080 metres below surface. of the lowest cost producers in the world.” While the No. 6 Winze will allow for more As an exploration, development and rapid access to the mine’s ore bodies below mining company focused on Southern Africa, 750 metres, it is only an interim measure, Caledonia’s primary assets are a 49 percent one that will remain in place while the

48,000

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Caledonia Mining company assesses its plans to sink a central shaft that could eventually descend to 2,000 metres.

“One of the major advantages of our operations at Blanket is that we have 18 satellite properties all within trucking distance of our main plant,” Hayden continues.

“Ever since we purchased the mine from Kinross Gold eight years ago we have been continuously investing capital to the point where our metallurgical plant now has a very substantial over capacity for what we are currently producing. Rather than this being a negative issue, we are now starting to take up

Blanket miners on their way to their workplaces

that over capacity by bringing these satellite properties into production as planned.”

Work currently ongoing around the main Blanket mine includes shaft sinking and underground development on one property

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ABB offers energy efficient drives solutions for all mill configurations, with the gearless motor providing continual energy savings through lower specific energy. Electrical power quality compensation ensures greater efficiency through harmonic distortion filtering and power factor correction. www.abb.co.za/mining

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Caledonia Mining

Underground loading a Granby car

and the dewatering of an older mine that also saw Caledonia complete a comprehensive ceased production in the late 1950s. While drilling programme at its Nama Base Metals all of this is ongoing Caledonia continues to Projects in Zambia. This involved drilling some stockpile ore from these operations, rather 10,903 metres over 20 holes, the results of than truck it to the plant, the reason for which confirmed the existence of the copperwhich Hayden goes on to clarify. “At Blanket bearing mineralised zone identified in 2011. we run a huge, highly efficient metallurgical The 2013 drilling programme on the asset plant where we recover gold at better than will include shallow drilling on the identified 93 percent. With this in mind we are simply zone to improve resource definition. Initial not prepared to jeopardise exploration work will also be carried out on additional that recovery by simply throwing ore into it without zones of mineralisation having first carried out that have been identified to extensive test work to ensure the west and south of the that we can adapt a blend mineralised zone. of that ore so that we don’t Turning back to Zimbabwe, Gold recovery at Blanket affect our overall recoveries.� while Hayden does agree that metallurgical plant The 2012 financial year the market there does pose

93%

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Our business is the supply of industrial electrical goods to various market segments. Products range from cables, motors, lighting, switchgear, distribution boards, circuitry, drives & electrical detection equipment.

We supply to industry, construction companies, municipalities, mines and carry a range of domestic products.

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vincent@bus-ex.com 72 | BE Monthly

several unique challenges, it also possesses considerable benefits which often do not get the coverage or recognition they deserve. “The biggest advantage of working in Zimbabwe is that we are dealing with a very well educated labour force who collectively boast a strong work ethic in everything they do. What we have found as a result is that we are able to utilise this labour efficiently, to the point where we employ around a third of the amount of labour that one of our neighbours employs in order to produce four times as much gold. It goes without saying therefore that we have found it to be an absolute pleasure dealing with labour in Zimbabwe.�

Leaving a positive legacy behind for Zimbabweans is also something that is at

Caledonia Mining

Aerial view of the Blanket operations

the forefront of Caledonia’s thinking when it comes to its operations in the country.

This commitment runs right through the business right down to the fact that it is the only African signatory of the Cyanide Convention. By putting less than 30 parts per million of cyanide onto its tailing dams Caledonia is reaffirming that not only is it safeguarding the welfare of its employees,

but also that of surrounding communities and the region in general.

In accordance with the Indigenisation and Economic Empowerment Act ten percent of the Blanket mine is actually owned by the local Gwanda community, with a further 16 percent held by the Sovereign Wealth Fund of Zimbabwe and ten percent by all of Blanket’s employees. Over and above its holding in the

“The recently reconstituted Blanket board have also approved a four year growth strategy for the mine” BE Monthly | 73

“Leaving a positive legacy behind for Zimbabweans is at the forefront of Caledonia’s thinking when it comes to its operations in the country” mine the Gwanda community has also been the recipient of $1 million donation from Blanket, which has also provided it with an advance dividend of a further $4 million to enable it to proceed with various community projects such as clinics, schools and the drilling of boreholes for water.

Other projects that highlight the corporate social responsibility aspect of Caledonia’s business include the building and rehabilitating

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of approximately 130 kilometres of hard top and dirt roads around the mine, and the ongoing support the company lends to local schools located within a 20 kilometre radius of its operations. Additionally, Caledonia has to date donated $2 million towards Zimbabwe’s Presidential Scholarship Fund. This fund enables Zimbabwean students based outside of the country to continue their studies at various international institutions.

Caledonia Mining

Panorama view of the Blanket mine and surrounding area

“Skills generation is something we are equally dedicated to facilitating in Zimbabwe,” Hayden enthuses. “As well as the six engineers we graduate on average each year through the country’s School of Mines we also operate a training school at Blanket from which we run more than 1,000 courses per quarter for our employees.”

It isn’t just the company’s employees who Caledonia have incentivised to improve their quality of life. Their dependents have also been encouraged to become more selfsufficient by growing vegetables. In order to help facilitate this the company pumps water from one of its smaller, out-of-use shafts to irrigate crops.

“All the aforementioned work we are doing is being done because we want to

improve the quality of life of our employees and neighbouring communities,” Hayden concludes. “Our employees can see this and a measure of their satisfaction when it comes to working for Blanket can be seen in the fact that our staff turnover figure is low at 0.01 percent per annum. This means that not only are we developing talent but we are retaining it, and that is crucial for any successful mining operation, particularly one that like ours is actively looking to expand, both in Zimbabwe and further afield.”

For more information about Caledonia Mining Corporation visit: www.caledoniamining.com

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Exploring golden frontiers Middle Island Resources Limited (MDI) is focused on gold, selecting underexplored territories within West Africa: it is not afraid of commitment, hoping to acquire a producing mine in Niger in order to consolidate its position there

written by: john o’hanlon research by: robert hodgson

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Middle Island Resources

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Middle Island Resources

B

alancing risk s against and cheaply collecting geochemical samples opportunities is always a difficult from underneath shallow overburden or in call, and it is a problem that ASX places where some surface contamination is listed Middle Island Resources suspected. The augers are typically simple takes very seriously. That is petrol engine driven devices mounded at the why the company, which was established to back of a small trailer or truck, and as such are develop gold prospects in West Africa, has versatile and easily moved to the optimum site. focused on countries that have an ‘acceptable’ “They allow rapid assessment of large tracts level of sovereign risk, and in which there has of prospective terrain,” he says, “defining the been some precedent of successful mining. saprolite gold response beneath transported The company has made rapid progress or transposed soil and laterite cover.” The since its IPO in December 2010, thanks to its Middle Island executive team has been largely strong portfolio of properties and the very responsible for recognising the requirement deep and broad experience of its management for this exploration technique, and was team, led by MD Rick Yeates, responsible for introducing the first fleet of 4x4-mounted a professional geologist with 30 years of international auger rigs into West Africa experience, much of it in in 2006 to facilitate an West Africa. After periods impressive increase in the deposit discovery rate. spent at BHP Billiton, Extent of Reo property Newmont and Amax, Yeates The three countries in in Burkina Faso founded a small consulting which Middle Island operates, and contracting group, RSG, Burkina Faso, Liberia and which subsequently grew into RSG Global Niger each have their own particular issues an international business which was sold to relating conflict and deprivation, however an Australian listed group Coffey Mining in they are generally stable jurisdictions and 2006. He remained with Coffey until he took share the need to develop their resources in the step of establishing Middle Island in 2010. order to provide much needed GDP growth.

Yeates and his team believe that West They are mining-friendly countries, and Africa offers exposure to one of the best- he points out that spreading out endowed and most prospective gold terrains operations across different economies itself on earth, where new discoveries continue to mitigates the risk to investors. These are also be routinely made and new projects are being under-explored territories. developed. The rate of discovery right across Liberia is a case in point. Middle Island’s the Sahel in particular, as opposed to the rain Nuon River Project, 275 kilometres from the forests to the south, has been enhanced by capital Monrovia, is considered to represent the application of auger drilling techniques. one of the most technically prospective gold Auger drilling is a useful tool for quickly holdings in West Africa and Yeates believes

1,116 km2

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Middle Island Resources it could generate in excess foraco of two million ounces of Foraco, a global provider of drilling services to the mining gold. This substantially industry in Africa, is pleased to be partnering with Middle under-explored region of Island Resources in advancing their projects in Niger and Liberia may yet prove to Burkina Faso. host the company’s first Our equipment includes high-tech drilling rigs offering significant gold resource, reliability, performance and safety. Our staff is experienced and dedicated to the successful completion of your projects. in part because the shallow All this combined with our values of integrity, innovation dip minimises drilling and involvement has resulted in Foraco becoming the third requirements. However largest global mineral driller. it is more expensive to www.foraco.com operate there so in view of the current uncertainty in gold prices the focus has shifted to more advanced targets in Burkina Faso and Niger.

The Reo Project in Burkina Faso lies approximately 150km by road west of the capital Ouagadougou and consists of exploration permits in which Middle Island has a 100 percent interest, acquired from Newmont Mining for $2.5 million. The exploration permits collectively cover an area of 1,166 square kilometres. Between 2007 and 2010, gold mineralisation was identified

by Newmont at six main prospects, and a further volcanic massive sulphide (VMS) prospect is located to the south-east of the Bissou permit application. A further prospect, Samba, has been identified Middle Island’s own subsequent exploration.

However many may feel that the foothold Middle Island has gained in the Sirba

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“You can produce gold on site, fly it out in an aeroplane and sell it over the counter” greenstone belt of Niger is of even greater potential. The gold mined at Samira Hill since 2004 has been of strategic importance to the government of Niger, which holds a 20 percent stake in the mine. The company had been developing a number of properties in the vicinity: now it has agreed to buy out the remaining 80 percent of Samira Hill from the Canada’s Semafo for $1.25 million. This is a transformational opportunity for Middle Island, says Yeates, who predicts a life of at least eight years, with production of between

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40,000 and 50,000 ounces per annum for the first three years with further upside when the other deposits within Sirba, namely Kirba and Tialkam South, are added. However it is not yet a done deal, as Niger’s state mining company Sopamin has expressed an interest in extending its existing 20 percent to full ownership of Samira Hill.

Despite recent fluctuations in the price of gold, in the longer term it remains very strong, he and his fellow directors are convinced. “You can produce it on site, fly it out in an aeroplane

Middle Island Resources

and sell it over the counter. There is no need for expensive infrastructure, railroads, ports and so on.” That creates an ideal situation in Africa’s Savanna belt, where roads are few.

Though headquartered in Perth, Western Australia, Middle Island’s primary operating base is located in Ouagadougou and is supported by small satellite offices in Niamey and Monrovia. Exploration bases and fly camps have also been established at the Reo, Nassilé and Nuon River projects. Middle Island Resources contributes up to five percent of its exploration budget each year to social development initiatives within the communities in which it operates.

This is no mere window dressing: the company insists on projects being sustainable in the long term. They must be developed

in close consultation with local communities and be consistent with their priorities. And they must be designed, implemented and managed by an experienced NGO. The first social project in partnership with French NGO, Eau Vive, provided the village of Pouni Nord near the Reo Project in Burkina Faso with drinking water, pumped by solar power. At Koutougou near the Nassilé Project in Niger the company built a school and sanitary facilities as well as a water borehole and further projects followed in Burkina Faso and Liberia.

For more information about Middle Island Resources visit: www.middleisland.com.au

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Allied Mining Services Limited

Bringing the world to East Africa With a history of 13 years in the mining industry and two generations of experience in the procurement sector, Allied Mining Services Limited continues to be a key contributor to East Africa’s growth

written by: Will Daynes research by: Candice Nice

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Allied Mining Services Limited

A

s much of the Western world spent the latter years of the last decade and the first few of this battling the global recession, the economies of Tanzania, Kenya, Rwanda, Uganda and Burundi have flourished. With each country experiencing economic expansion of between five and ten percent during the years during and following the crisis it comes as little surprise that East Africa has since been considered the core of Africa’s growth.

In recent years the prosperity of the region has benefited countless companies and businesses, particularly those that inhabit leading positions in their respective fields. Allied Mining Services Limited is a major supplier and stockist of mining, construction, industrial and agricultural products in and around East Africa.

With a history of many years in the mining industry, not-to-mention two generations of experience in the procurement sector, Allied has achieved a strong foothold in the mining and construction market sectors. From what was once a small retail shop the company would go on to become one of the fastest growing businesses in Tanzania.

“Thanks to the experience of two generations, as well as an apt and powerful team, and our ‘Yes’ mentality we have seen the business go from strength to strength,” states Managing Director, Ashish Pattni.

“In that time our team has been able to gain extensive knowledge, expertise and understanding of the market which, when combined with their high degree of expertise, allows them to provide the type

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of service that drastically reduces the end user’s time and money.”

Professionalism has always been the quality that Allied has considered to be its core strength, something which it ensures goes hand in hand with ensuring 100 percent customer satisfaction. “We pride ourselves in ensuring customer satisfaction is our number one priority, continuously striving for excellence,” Pattni continues.

Allied’s excellent track record over the years has meant that it is today partners and distributes a wealth of major brands and products commonly used throughout the mining sector, a fact that allows the company to source solutions world-wide at an affordable price. Among the key product manufacturers that Allied can call itself a distributor of, one can list 3M, Uvex, Heckel, Hardox Wear Plates, Yale Lifting Equipment, Buccaneer Pumps, Ridgid Power Tools, Karcher to name but a few.

More recent developments have seen the company agree partnerships with a number of other reputable players, specifically Heckel Footwear, Karcher High Pressure Cleaners and Ridgid Power Tools. In addition to this, the company has gained a fleet of vehicles that will now be used for transportation and leasing and hiring.

“Our manufacturers are carefully shortlisted and tested to ensure we provide the best quality products, abiding by ISO standards,” Pattni highlights. “Allied is a highly reputable and reliable company where the end user can be assured to be the recipient of paramount service that exceeds all expectations. This means that we are commonly referred to

“Allied has been the heart and soul of East African development, boasting years of experience in the industry and market sector” 88 | BE Monthly

Allied Mining Services Limited

as the one-stop supplier and fact that we exist as one of the key players in one of the stockists for all requirements within the mining and country’s leading business construction sector.” sectors and that we continue Tanzania has long been to improve ourselves with Experience that the one of the major contributors each passing year.” company has of operating to East Africa’s growth and Allied has been the heart within the mining sector and soul of East African Allied has been operating in the country since its own development, boasting years inception, playing its part in of experience in the industry the development of the country, something and market sector. “We pride ourselves in that it has been justly recognised for. “In being one of the number one suppliers in 2011,” Pattni explains, “we were honoured Tanzania and one that has taken growth to to become the recipient of the “Second-Best another level,” Pattni explains.

Tax Payers Award” by the Tanzania Revenue With the world’s eyes having increasing Authority. To us this further reinforces the turned to Africa in the last several decades

13 years

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“It does not matter in which area a business is located, sustainability should be the key core value of the company” in the pursuit of investment and business opportunities, the importance of the fact that Allied has been present in the market for so long is certainly not lost on Pattni.

“The mining and construction markets have long been, and continue to be, hugely important to Tanzania’s growth as a nation.

By being ever-present in the country we have enabled ourselves to remain ahead of

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the curve in comparison to a great many of our international competitors that are relatively new to the scene.”

As well as contributing to the economic development of Tanzania, Allied also has a long track record of playing a role in improving the sustainable growth of the mining and construction sectors, something that has risen from the fact that the company

Allied Mining Services Limited

believes that sustainability should be the driving force behind any business, which is in turn incorporated into its core values.

“In an ideal world, any company would like to sustain their business for a life-time,” Pattni explains. “Therefore it does not matter in which area a business is located, sustainability should be the key core value of the company and as such one should always work to ensure that this train of thought grows horizontally and vertically within their business model.

We at Allied Mining believe this and always ensure we adapt to the market requirements to ensure sustainability is always achieved.”

In much the same way as Pattni believes that sustainability should be a goal that all businesses strive towards, he also recognises

that for any business the ultimate goal should be to become the leading figure in its chosen field and sector. “In many ways,” he concludes, “Allied Mining has already achieved this goal in Tanzania and as such it is now our job to retain this position in the marketplace. Meanwhile, it is now our aim to focus towards the rest of East Africa and provide the same services to the mining and construction sector in countries across the region, doing so on the basis of what we have achieved in Tanzania.”

For more information about Allied Mining Services Limited visit: www.alliedgroup.co.tz

BE Monthly | 91

92 | BE Monthly

Sino Grinding

Grinding out results Pieter Theunissen, Marketing Manager for Africa, and Mark Addison, General Manager of Sino Grinding (Americas) Inc, explain how Sino Grinding became the next global leader in grinding media and how it intends to remain as such

written by: Will Daynes research by: Gareth Hardy

BE Monthly | 93

SAG mill in action

Sino Grinding

I

t was more than a decade ago now that Paul Peng, at the time working for another company designing his own unique grinding media, decided it was time to go it alone and set up his own business. It was this calculated determination that led the creation of Sino Grinding.

“In the early days of the business,” explains Pieter Theunissen, Marketing Manager for Africa, “it specialised in the design of grinding media for use in SAG mills. It was this somewhat niche market that Paul identified as being one that was often missed entirely by the larger grinding ball manufacturers.

What he subsequently did was design SAG mill grinding balls that could withstand high levels of impact and possessed good abrasion resistance. Upon testing these balls were found to be highly successful and it was from here that the business would go from strength to strength in the years that followed.”

Today the Sino Grinding Group of companies promotes its grinding media on a global level, providing its clients with regular on-site technical support, while proactively carrying out advanced research and development in order to bring new products to market to deal with specific problems. The group itself is made up of several companies, subsidiaries and representatives including, Sino Grinding Industries, Sino Grinding International, Beijing Sino Grinding International and Sino Grinding (Americas) Inc. Since its formation Sino Grinding’s aims, when it comes to the work it does for its clients, have centred on four main focus areas, those being the said clients’ steel

BE Monthly | 95

consumption levels, the costs expended per quantity of ore milled, achieving grind by particle distribution improvements and increasing throughput levels.

“From day one,” states Mark Addison, General Manager of Sino Grinding (Americas) Inc, “we work continuously and tirelessly with our clients until we know that we have the right solutions to meet their requirements.

We are not milling specialists who provide a general purpose product to the whole industry, rather we are specialist designers and as such we work to the targets and specifications set by our customers.”

What makes such a unique approach possible is Sino Grinding’s impressive range of seven different types and grades of forged SAG grinding media. This far outnumbers the industry average which tends to see commercial grinding ball manufacturers producing no more than two types of media.

Sino Grinding’s grinding media range in size from 0.5” (13mm) up to 6.5” (165mm) and cover all different kinds of mill type.

“What our range of products allows us to do is match the environment that a customer is milling in to a particular solution,” Addison continues. “Further to this we provide technical services that including modelling the milling operations of our customers to

improve the whole process, choosing the correct grinding ball sizes and carrying out the initial ball charge calculation for the commissioning of new mills.”

One recent, and particularly impressive, example of how Sino Grinding is able to improve the grinding activities of its

“We take huge pride in the fact that we are not copiers, rather we are innovative designers” 96 | BE Monthly

Sino Grinding

Paul Peng listening for ball on shell impact

customers can be found in the world, where the said Zambia at First Quantum industry figures have a Minerals’ Kansanshi Mine. first-hand opportunity to Here the company has compare the products they currently use with those of assisted in halving the The size range of Sino Grinding’s grinding media Sino Grinding. operation’s consumption “During these tests,” rates of mining media in Addison highlights, “one of kilograms per tonne, thus helping it to make considerable cost savings the first things we work towards is being over an extended period of time. able to provide a recommendation of what With such successful examples already the best size of grinding ball product would visible within the marketplace Sino Grinding be for a particular potential customer, then is currently working to build upon this the selection of the Sino wide range of by conducting tests with a wide range of media grades begins. This is our starting companies and mining operators throughout point from which we can begin to modify

0.5”-6.5”

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125mm Sino-4 grinding balls in a 6.5m SAG mill

“Our wide product range, unique customer focused approach and dedication to quality has put us ahead of the game and that is where we intend to stay” said recommendation throughout the course of discussions with the customer.

Time and again we have found this to be the best way of achieving the targets and aims that we are set.”

One of the other unique qualities that Sino Grinding boasts is the fact that it uses

98 | BE Monthly

a specially designed multi-hammer forging process. Much as has been the case with the chemical composition of the company’s grinding ball range, attempts have been made by competitors to replicate this process however no one has yet managed to get all the components right. “We take huge pride in

Sino Grinding

Grinding balls after use

the fact that we are not copiers, rather we are innovative designers,” Theunissen enthuses.

“Because of this we have managed to stay ahead of the curve and we estimate that we are still some years ahead of our nearest rivals when it comes to research and development.”

While Sino Grinding has always been committed to developing new products and solutions the same can’t necessarily be said about the vast majority of its competitors and this has resulted in an industry sector that, overall, has seen very little in the way of change for the last two decades. This however is something that the company expects to change in the not-too-distant future.

Examination of grinding balls

“Eventually the market as a whole will have to lift its quality levels,” Addison concludes. “This will happen slowly and while it does it is our own aim to be recognised as the go-to-guys when it comes to SAG milling and grinding ball solutions.

Our wide product range, unique customer focused approach and dedication to quality has put us ahead of the game and that is where we intend to stay.”

For more information about Sino Grinding visit: www.sinogrinding.com

BE Monthly | 99

100 | BE Monthly

Leni Gas & Oil (LGO)

Delivering

growth Chief Executive, Neil Ritson discusses how, by tapping into Trinidad’s underexploited resource wealth, Leni Gas & Oil (LGO) is fast on its way to becoming one of the premier junior oil companies

written by: Will Daynes research by: Robert Hodgson

BE Monthly | 101

Altech-2 rig

Leni Gas & Oil (LGO)

B

oasting one of the highest growth rates and per capita incomes in all of Latin America, Trinidad and Tobago is among the wealthiest and most developed nations in the Caribbean. It is also the leading Caribbean producer of oil and gas, and its economy is heavily dependent upon these resources, with them accounting for approximately 40 percent of its GDP and 80 percent of its exports.

Boosted by recent oil finds, including the 48 million barrels discovered off south-west Trinidad in 2012, the industry continues to thrive, drawing in investment on a regular basis. One company that has been established in Trinidad for several years now is Leni Gas & Oil (LGO). Incorporated in 2006, the company’s strategy is based around the simple concept of delivering growth through the acquisition of proven reserves, enhancement of producing assets, and the identifying and acquiring of underexploited projects.

“In many respects the most important progress that the company has made has come in the last couple of years,” states Chief Executive, Neil Ritson. “In that time we have really focused our efforts on the reactivating of old oil fields where we have identified opportunities for additional reserves and production that have previously been overlooked for various reasons.”

Turning back the clock slightly, LGO’s original asset of note was the Ayoluengo oilfield, one that was originally discovered in the 1960s by Chevron and operated by LGO since October 2007. Having spent the much of the next five years developing Ayoluengo the decision was made to expand

BE Monthly | 103

40% Of Trinidad’s annual GDP stems from oil and gas

First sale from Tank 2

104 | BE Monthly

into other areas of interest in order to grow more rapidly. Initially this led the company to the Gulf of Mexico and it was around this period in its history that LGO became exposed to Trinidad.

“Almost immediately,” Ritson continues, “we came to the realisation that Trinidad was a very good match indeed with our corporate strategy and that this location, which has been an active producing region for more than 100 years, possessed a cost structure that offered us a better set of opportunities to grow than that which exists in Europe.

With this in mind we decided to focus our future investments on the region and that has become core to our strategy going forward.”

At the heart of LGO’s operations in Trinidad is the Goudron Field. It does however also hold assets in the form of the Icacos Oilfield, the Moruga North leases and the Cedros Peninsular leases. Located between the East Moruga and Beach Marcelle fields in south-eastern Trinidad, Goudron was originally discovered

by Trinidad Leaseholding Limited in 1927 and was largely developed in its current form by Texaco between 1956 and 1986. It was then in late 2009 that a field reactivation contract for Goudron was signed and this contract was acquired by LGO in October 2012.

Leni Gas & Oil (LGO)

Sales Tanks 1 and 2 at Goudron

“What we are doing at Goudron today is using our expertise in field well reactivation to take wells that have been neglected and bring them back into use,” Ritson explains.

“In doing so we take a TLC approach rather than a high-tech one. These wells are not in a condition that makes them conducive to many new technologies. Our approach has already started to create a positive return with production from the field rising

from an incredibly low base to around 350 barrels a day, which represents growth of more than 750 percent in only nine months of operations.”

LGO’s move into the Trinidadian market came at a time when government and industry figures had become increasingly vocal about the decline in local production. By coming into the region with an expressed aim of bringing underexploited projects back into production

“By using state-of-the-art drilling technologies we plan to drill 30 new wells and we expect to achieve a significant uplift in production” BE Monthly | 105

“For us this is a country that has the potential to help us grow into a company capable of producing up to 5,000 barrels per day�

Altech-2 rig at the Goudron field

106 | BE Monthly

Leni Gas & Oil (LGO) the company quickly gained the support of local bodies and the government.

As Ritson goes on to highlight, this immediate support wasn’t the only benefit that the company gained from setting up operations here. “Trinidad has a long history of oil and gas activity and that has resulted in an experienced local workforce.

This has allowed us to staff our organisation exclusively with Trinidadians. Indeed there is not a single ex-pat within our local workforce and this gives us a unique strength in the marketplace.”

When it comes to the medium term plans for its Goudron asset, LGO is currently working with approximately 90 old wells across the field, which together are expected to contribute around 400 barrels per day at peak production. The future beyond this involves the drilling of new infill wells across the existing area.

“By using state-of-the-art drilling technologies we plan to drill 30 new wells and we expect to achieve a significant uplift in production,” Ritson says. “Currently we are awaiting the environmental consent to commence this work and while it will then take a month or two to mobilise equipment and start the programme, executing this work really starts to change the forward momentum of the business. The recent

GEPL and LGO technical staff

awarding of reduced overriding royalty terms from Petrotrin at Goudron will also assist us to more rapidly deploy capital.”

When combining both its Spanish and Trinidadian operations, LGO’s group production is currently running at between 400 and 450 barrels per day, which is significant by junior oil company standards.

With new drilling the company anticipates this figure quickly rising to between 1,000 and 2,000 barrels per day.

As far as the long-term future for the company goes, Ritson’s thoughts have also begun to turn towards the planning of secondary recovery at Goudron. “While Goudron has to date only produced somewhere between four and five million

BE Monthly | 107

Goudron tank battery

Leni Gas & Oil (LGO)

750% Of Trinidad’s annual GDP stems from oil and gas barrels, it actually has a very significant in-place volume and our task will be to start giving the field more energy via water injection and start to sweep some more of that oil into the producing wells. That is one particular programme that can also start once we commence with new drilling.”

In the meantime LGO is naturally aware that there are other opportunities in Trinidad that it could one day capitalise on.

“We are a company that is prudent in our growth strategy,” Ritson concludes. “We don’t see ourselves taking on more than we can reliably deliver, but saying that we have negotiated some other options in Trinidad, other opportunities that we believe have the potential to give us a good return on production growth and we will continue to work those so that they provide us on-going and sustainable growth. For us this is a country that has the potential to help us grow into a company capable of producing up to 5,000 barrels per day. Our job is to go out there and utilise our strengths to make this a reality.”

For more information about Leni Gas & Oil (LGO) visit: www.lenigasandoil.com

BE Monthly | 109

Revolutionary energy provider

Arguably the greatest contributor to Venezuela’s econom social development, everything that Petróleos de Venezu S.A. (PDVSA) undertakes is in the interest of the countr inhabitants and of maintaining its unique oil sovereign

written by: Will Daynes research by: David Brogan

110 | BE Monthly

Petróleos de Venezuela, S.A. (PDVSA)

rs

mic and uela, ry’s nty

BE Monthly | 111

PDVSA

O

fficially recognised as the fifth largest oil exporting country in the world, the Bolivarian Republic of Venezuela also boasts the largest reserves of heavy crude oil, estimated at more than 99 billion barrels as of 2010. When putting such an astronomical figure into context it is easy to see why the petroleum industry is universally seen as being the backbone of the country’s economy, accounting for half of total government revenues and approximately onethird of its annual GDP. Petróleos de Venezuela, S.A. (PDVSA) is the state oil company of Venezuela, created by governmental decree on 30 August, 1975, during the first presidential term of Carlos Andres Perez and following the nationalization of the country’s oil industry.

PDVSA’s operations officially commenced on 1 January, 1976, and to this day its operations are supervised and controlled by the People’s Ministry of Petroleum and Mining.

Seen as one of, if not the main driver of the economic and social development of the country, PDVSA is in charge of the exploration, production, refining, storage, manufacturing, transportation and marketing of hydrocarbons. All of the aforementioned responsibilities are conducted in an efficient, profitable, safe and transparent manner, and are done so for the benefit of the Venezuelan people.

In the past PDVSA has been ranked as high as number 66 among Fortune Magazine’s list of the 500 largest companies in the world and as of late 2011 it was estimated that the company could stake claim to having the

BE Monthly | 113

PDVSA largest oil reserves in the Siemens world, with a certified total of Over the last decades, Siemens has been a key partner 296.5 billion barrels, a figure of Venezuela providing products, solutions and services, which represents 18 percent as well as experienced professionals for its economic and of the world’s total reserves. social growth.

Following the end of the Siemens has cutting-edge technology and an environmental Venezuelan general strike in portfolio available for the development of Orinoco’s Belt Project in Venezuela specifically for grassroots refineries; 2003, a new era for PDVSA power generation, transmission, and distribution of its began with a renewed different blocks; petcoke-fired power plants; substations; emphasis being placed on the petcoke gasification; electromagnetically gravity drainage fact that the company existed for heavy oil production; water technology; intelligent in the hands of the Venezuelan wellhead clusters; cogeneration; oxy-fuel turbines; tank people, thus deepening the farms; and marine terminals. country’s oil sovereignty.

Siemens is committed to provide answers tailored to our customers and markets’ needs.

“The New PDVSA”, as it is www.siemens.com/energy often referred to as, today finds itself perfectly aligned with the Venezuelan State’s guidelines with each one of its workers committed towards the rebuilding of the company, which represents the building of a better future for the entire nation.

This theme of building towards a better future also sees PDVSA participating in and promoting activities aimed at fostering the comprehensive, organic and sustainable development of the country in areas such

99

Billion Barrels Venezuela’s estimated reserves of heavy crude oil as of 2010

114 | BE Monthly

Natural resources are getting scarce.

Siemens makes sure solutions aren’t.

Efficient use of fossil resources is necessary for a sustainable energy system. siemens.com/energy

Although we can harness energy and generate power in new ways, we still rely on fossil fuels. As we know, the supplies of these fuels are finite, and many countries have no such reserves of their own.

That’s why we have to be ever more conservative with our natural resources. We need to use them as efficiently as possible while we develop a sustainable energy system that provides affordable power for all.

Answers for energy.

as agriculture, industrial, infrastructure, manufacturing and marketing of goods, services, and the financing of healthcare, education, housing and food programs.

The goal is to establish a proper connection between hydrocarbon revenues and the Venezuelan economy, with an active contribution to the actual process of building Socialism.

In recent years PDVSA has also seen its international activities expand at an unprecedented pace. From its five offices, located in Argentina, Brazil, Cuba, United Kingdom and the Netherlands, the company maintains extensive commercial relations with its existing partners across the globe as well as with those nations that possess a great deal of interest in investing in the oil sector.

PDVSA’s international activities actually go even further beyond its five offices. In Europe for example it participates through its affiliate PDV Europa, which is headquartered in The Hague, Netherlands, and holds a 50 percent stake in the companies, Rulor Oil of Germany and AB Nynäs Petroleum, while it also has a presence in London where PDV UK acts as a market intelligence office.

Meanwhile in the Caribbean, PDVSA operates the refinery and storage affiliate Isla Refinery in Curaçao, through a long

term lease contract. Additional affiliates in the region include Bonaire Petroleum Corporation (BOPEC) and Bahamas Oil Refining Company (BORCO), which operate storage terminals in their respective regions.

Other international assets include CITGO, an affiliate in the United States and refineries all over the world.

“PDVSA participate in and promote activities aimed at fostering the comprehensive, organic and sustainable development of the country” 116 | BE Monthly

PDVSA

The last decade or so has also seen the company open up subsidiaries and affiliate entities in many important developing markets, including Columbia, Ecuador, Uruguay, Bolivia, Argentina and China.

PDVSA China was created in August 2005 specifically to evaluate both upstream and downstream business opportunities in the Asian region. Together with its other affiliates it continues to help diversify the Venezuelan oil market.

In the last several years the company has commenced work on a number of significant national projects, including the construction of several new refineries in the country. These include the Batalla de Santa Inés Refinery in

Barinas state, which will possess a processing capacity of 100,000 barrels per day following an investment of $2.9 billion. In its first phase it will start producing gasoline and diesel, in addition to fuel oil to meet electricity generation needs. The plant is expected to be ready by 2014.

Meanwhile, the Cabruta Refinery in Guarico state will have a processing capacity of 221 thousand barrels per day from the Faja Petrolífera del Orinoco (Orinoco Oil Belt). It will be built in three stages with construction expected to start in 2017. As opposed to Batalla de Santa Inés which will produce fuel, Cabruta will initiate its operations as a heavy crude upgrader, but

BE Monthly | 117

“PDVSA’s workers are as committed today as they have ever been to the defence of national sovereignty and energy sovereignty in Venezuela” later in 2027, it will be a fuel refinery.

Another area of work for the company centres on the design of two industrial services condominiums. These will ensure the supply of services such as natural gas, electricity, hydrogen, nitrogen, plant air, instrument air, vapour, boiler water, cooling water, drinking water and fire fighting water to meet the demands of the

118 | BE Monthly

Extra Heavy Crude Upgrading Complexes in the Junín and Carabobo areas.

PDVSA estimates that the first services condominium will start operations in the year 2015 for the Junín area and in the year 2016 for the Carabobo area. PDVSA’s participation will be 60 percent, which entails an investment of $5.8 billion.

Moving forward, much of the company’s

PDVSA

plans tie in with The Siembra Petrolera Plan (Oil Harvest Plan) 2005-2030, an initiative introduced in Venezuela in August 2005.

This Plan sets forth the oil policy guidelines until 2030. These include supporting national socioeconomic development with the purpose of building a new economic development model which is fairer, balanced and sustainable in order to fight poverty and social exclusion, and boosting the energy integration process of Latin America and the Caribbean. The plan also calls for the oil industry to become a geopolitical instrument to encourage the creation of a multipolar system which benefits developing countries, and counteracts the current unipolar system.

PDVSA’s workers are as committed today as they have ever been to the defence of national sovereignty and energy sovereignty in Venezuela. They are aware that adding the greatest value possible to hydrocarbons is among their duties, guided by the principles of unity of command, teamwork and efficient use of resources, while transparency and accountability also constitute key values for the company that it promises to hold on to for many decades to come.

For more information about PDVSA visit: www.pdvsa.com

BE Monthly | 119

120 | BE Monthly

Repsol Sinopec Brasil

A partnership made in Brazil Country Manager, JosĂŠ MarĂ­a Moreno discusses how the coming together of Repsol and Sinopec is bringing huge benefits to Brazil, both economically and socially

written by: Will Daynes research by: David Brogan

BE Monthly | 121

Platform Marcos Pinto

Repsol Sinopec Brasil

I

t was in December 2010 that two of the and came as a result of a strategic alliance world’s foremost oil and gas companies formed between the governments of Brazil came together in one of the globe’s and China, with Sinopec International most exciting locations for oil and gas Petroleum Service of Brazil Ltd formally development, Brazil. Repsol Sinopec Brasil established in February 2005. was born out of a capital increase, in which Since the coming together of the two Sinopec, the largest oil and petrochemical parties in late 2010 the capital invested by company in China, contributed more than Sinopec has begun to be used to develop $7.1 billion towards Repsol Brazil. The several upstream projects in the country, transaction gave rise to a company that today some of which are thought to be among the possesses a market value of some $17.8 billion. most important discoveries anywhere in Repsol’s own history in the country the world in recent years. These include the dates back to 1999, when Santos Basin, Campos Basin Repsol Spain purchased the and Espiritu Santo Basin Brazilian subsidiary of YPF. oil exploration projects.

In the years that followed At the time of the two the company pioneered companies coming together the process of opening the Repsol Chairman, Antonio Brazilian energy sector and Brufau stated that the deal was the first private company was a “good reflection of The market value of to invest in domestic the value created by the the company refining by investing in the investment of technical, Manguinhos Refinery in Rio human and material means de Janeiro. Furthermore,

by Repsol in exploration, Repsol also pioneered the development of particularly in Brazil’s pre-salt offshore in natural gas projects by importing gas from recent years. Together with Sinopec, an Bolivia and Argentina to the thermoelectric internationally renowned and experienced plants based in Uruguayana and Cuiabá. partner, we can do our part in expanding In addition to the above, an Asset Exchange business relations between Brazil and China.”

Agreement with Petrobras in December 2001 “The relationship between Repsol and saw the company take a 30 percent stake in Sinopec in Brazil has been, and remains, the Alberto Pasqualini Refinery (Refap) in Rio nothing short of excellent,” states Country Grande do Sul, as well as a network of service Manager, José María Moreno. “The strength stations concentrated in Central, Southeast of this partnership can perhaps best be and South Brazil, plus a ten percent stake displayed by the fact that every three in the field Albacore Leste, one of the months we hold special committee meetings largest oil fields in the country. attended by senior board members of the Sinopec’s time in Brazil began in 2004 two companies. At these meetings there can

$17.8 Billion

BE Monthly | 123

Repsol Sinopec Brasil be as many as ten different business proposals presented and not once to date has any such proposal been met with a negative vote. To me this reinforces the belief that we are a collective entity that shares the same vision for what we want to achieve in Brazil.”

Repsol Sinopec’s already considerable portfolio was further strengthened in February 2012 by the discovery of the Pão de Açúcar well at the Campos Basin. With estimated reserves of more than 700 million barrels of extremely light oil and three million cubic feet of gas, the Pão de Açúcar well represents the biggest discovery

ever made on the Campos Basin pre-salt site.

In addition to the Pão de Açúcar well, Repsol Sinopec Brasil’s assets today include two producing fields, the Albacora Leste and the Sapinhoá fields, and one field currently under

ocean rig Ocean Rig is proud to have been chosen as the preferred drilling contractor by Repsol Sinopec for its development of the ultra deepwater drilling campaign in Block BMC-33 in the Campos Basin offshore Brazil.

Block BM-C-33 is one of the biggest offshore pre-salt discoveries in Brazil.

Ocean Rig are confident it will successfully contribute to Repsol Sinopec’s drilling campaign by providing a highly efficient and incident free drilling campaign by utilizing the most advanced and sophisticated ultra deep water drilling unit (Ocean Rig Mylos), second to none engineering solutions, and a

highly motivated and competent workforce for the development of Repsol Sinopec’s important and strategic development offshore Brazil.

Ocean Rig has a keen desire to build up long-term strategic relationship with key clients. We are very excited to include a major integrated oil and gas company as Repsol Sinocpec to our list of partners. We are convinced this partnership will create great value and optimal returns to the shareholders of both companies. www.ocean-rig.com

BE Monthly | 125

Safety | Field Development Planning | Marine and Facilities Consulting Subsea and Pipeline Engineering | Flow Assurance

Deep Thinking n

n

n

n

New sources of hydrocarbons present new opportunities Deeper water and remote hostile locations present new challenges Creativity is required to unlock value from these opportunities New opportunities and challenges require new thinking

K13112 Š 2013 KBR. All Rights Reserved

For over 25 years, Granherne has found the right development solutions with creativity and efficiency – your consultant of choice.

Delivering Consulting Excellence www.granherne.com

Repsol Sinopec Brasil

2010 The year that Repsol Sinopec Brasil was established

development, that being the Piracucá fields.

In addition to these the company also has one block under assessment, BM S-9 in Carioca, and a total of twelve exploratory blocks, five of which are operated by the company. Each of these possesses a great degree of potential lying as they are in one of the world’s largest growth areas for hydrocarbon reserves.

With its roots so deeply entrenched in the growth of Brazil’s oil and gas sector it comes as little surprise when Moreno starts

to highlight the contributions that Repsol Sinopec Brasil has made, and is making, to the sustainable development of the country by investing in solutions to protect the environment, communities and people. “All KBR KBR and its subsidiaries GVA, Granherne and Energo of our social programmes provide innovative, cost-effective services for subsea and initiatives are continuous and pipelines, FPSOs, fixed platforms, topsides and undertakings that aim to semi-submersibles. For optimized oil and gas solutions, make a significant difference you can trust KBR to deliver. to the world around us.”

KBR – Project Management, FEED, Detailed Engineering, Repsol Sinopec Brasil’s EPCm and EPC Delivery for Onshore and Offshore Fixed policy for corporate social and Floating Facilities.

GVA – Hull and Marine Systems, Conversions, Drilling responsibility is based on the Rigs, Engineering Management, Construction Support. award winning guidelines of Granherne – Field Development Planning, Feasibility, its holding company, Repsol.

Concept and Pre-Feed Studies for Fixed and Floating The social responsibility Facilities, Subsea Systems and Flow Assurance. projects in which Repsol Energo – Integrity Management for Fixed, Floating and Sinopec Brasil invests aims Subsea Systems, Risk-Based Inspection Planning. to enhance the quality of life www.kbr.com of communities and provide

BE Monthly | 127

benefits to society in general. “As a company,” Moreno continues, “we believe wholeheartedly in Brazil and that is the fundamental reason why we have all made a commitment to work even harder towards successfully developing strong energy solutions for Brazilians in a transparent and responsible way.”

One of the ways that the company has been giving back to people for some time now is through the Repsol Sinopec Education Platform. Working in partnership with the country’s Navy the company uses this

programme to train artisanal fishermen and provide them with professional qualifications.

Having begun in July 2009 it has since been rolled out to 17 cities in Brazil to the benefit of more than 10,000 people.

From an environmental perspective, Repsol Sinopec is the only oil company partner of the SOS Mata Atlântica foundation, with which it develops various fauna and flora conservation and recovery initiatives. The project Florestas do Futuro (Forests of the Future) is one of the widest spanning programmes of its kind

“We are very much focused on bringing our oil exploration projects to production over the next two year”

The Repsol Sinopec Education Platform

128 | BE Monthly

Repsol Sinopec Brasil

The Repsol Sinopec Education Platform in transit

and involves the recovery of riparian forests in hydrographic basins, something which is vitally important for the production of water and biodiversity conservation.

Its partnership with the SOS Mata Atlântica foundation has enable the company to plant two forests with a combined area that is equivalent to 22 soccer fields in the riparian forests of Paraíba do Sul river and on the Tietê river basin in the state of São Paulo.

Repsol Sinopec also invests in the environmental protection of the coastal area of the country. The Costa Atlântica program has joined up with five Brazilian NGO projects that are contributing to maintaining sustainable development and the balance of the environment, including the conservation

of natural, biological, historical and cultural estates existing in those regions.

“As we look to the future,” Moreno concludes, “we are very much focused on bringing our oil exploration projects to production over the next two years.

Achieving our targets for these projects is of crucial importance to us. Meanwhile, as we develop our existing assets we will continue to look at the possibility of adding new ones accordingly, both within Brazil and further across the region.”

For more information about Repsol Sinopec Brasil visit: www.repsolsinopec.com.br

BE Monthly | 129

Delivering quality o

where it’s needed

Global Sourcing & Supply (GSS’s) multi-disciplined app business has allowed it to become one of the foremost p of complete site support services and operations in all o

written by: Will Daynes | research by: Gareth Hardy 130 | BE Monthly

Global Sourcing & Supply (GSS)

of life

most

proach to providers of Africa

y BE Monthly | 131

GSS catering service

GSS

W

orking to the highest international standards, Global Sourcing & Supply (GSS) is an integrated facilit y management and contract supply operation supported by an advanced logistics capability.

GSS is a wholly owned subsidiary of BMMI Group, headquartered in the Kingdom of Bahrain, and currently operates in Qatar, Iraq, Djibouti, Mali, Gabon, Ghana, Burkina Faso, Kenya, the Republic of Sudan and South Sudan, providing flexible options for logistics and service delivery and engaging with a multitude of international governments, non-government organisations and industrial clients.

The GSS team also provides complete site support services and offers turnkey solutions in the establishment and management of remote site operations to industries as diverse as mining, construction, agriculture, oil and gas.

With Africa’s remarkable growth, driven in large part by a minerals and energy boom, numerous companies seized the opportunity to explore new oil rigs in the region which opened the door for GSS to expand its integrated facility management solutions and contract logistics. In recent years, GSS has managed to successfully cater to the needs of major companies delivering quality services in the most rigorous locations in Africa.

When it comes to Integrated Facility Management (IFM) solutions, GSS covers the entire spectrum, from the provision of prepared meals and a range of ancillary ser vices inclusive of housekeeping,

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laundry, operations and maintenance, to camp retail (commissary) services and leisure requirements.

GSS understands the importance of delivering quality services in the most remote locations in Africa and therefore it ensures that it caters to its clients, using only the best quality, handpicked ingredients. The company’s catering staff ensures all food is

expertly displayed and served hot and fresh from the pan. Service options range from selfservice cafeterias to retail coffee shops and seated, full service à la carte style.

In terms of the company’s janitorial services, GSS’ satisfaction lies not only in making sure its clients reside in clean and comfortable surroundings, but also for them to experience the high quality services provided

“GSS has managed to successfully cater to the needs of major companies delivering quality services in the most rigorous locations in Africa”

GSS cleaning/janitorial services

134 | BE Monthly

GSS

GSS laundry service

by its team. It is GSS’ goal to clockwork, its team provides door-to-door pick-up and pay attention to every single drop-off of laundry, handling detail and to keep its clients’ workplace tidy and their all clothes, uniforms and lodgings homely, to meet and linen with the utmost care.

Tons of goods handled exceed their expectations.

As GSS’ ultimate goal is continuously by GSS’ Through the years, GSS to ensure its clients get their major prepositioning has built its reputation work done in a safe and well warehouse protected environment, the on providing outstanding company is constantly looking cleaning services using state of-the-art equipment, environmentally to utilise advanced systems with customised preferred products and unique cleaning solutions to protect every aspect of its client’s processes to ensure clients’ facilities are company assets. Its services in this field range cleaner and healthier than ever before. from 24-hour security, entrance control and GSS’ complete range of laundry options central control to remote monitoring of CCTV includes Express, Same Day and Overnight and security system audits. services for guest and employee laundry. Like GSS has been actively supporting customers

30,000

BE Monthly | 135

GSS can source temporary structures

“GSS truly believes that over the next few years it is likely to grow and continue to attract and retain clients in the oil industry� in Africa with major contract logistics capabilities for several years. An example of this is a major prepositioning warehouse operation in East Africa handling up to 30,000 tons at any point in time including receipt, warehousing and redelivery of bagged commodity items in support of humanitarian efforts in the Horn of Africa.

In addition, GSS provides sourcing services for components, spare parts, repair engine

136 | BE Monthly

parts or any FFE requirements. Preferred supplier agreements in all major markets allow its dedicated team to match up customer requirements with a manufacturer’s part number, sometimes within hours. The company then ships to remote locations, expediting the order within 48 hours. Its suppliers cover all aspects of technical supply and demand, no matter how big or small.

Utilising a multi-model approach, GSS has

GSS

GSS contract logistics

supported rations in contingent and active war zones, while maintaining full product integrity throughout the supply chain so that it arrives fresh for troops. Furthermore, it has trading agreements in place with major suppliers and is able to process requirements through varied consolidation capabilities within a short span of time.

GSS’ team is also capable of sourcing, shipping and fully integrating the provision of temporary structures for accommodation, kitchens, messing, recreation, offices and retail.

During the past few years, GSS was faced with uncertainty driven by increased competition, geo-politics and economic indicators in the African region. However, with GSS’ solid experience and reputable

GSS camp design

name in the African market, it has managed to enter new countries, secure new contracts and enter new acquisitions and joint ventures this year.

The future of Africa looks promising and therefore GSS truly believes that over the next few years it is likely to grow and continue to attract and retain clients in the oil industry. This high demand for its IFM solutions has been also driven by its exceptional services provided by its experienced and skilled technical staff across the industry.

For more information about Global Sourcing & Supply (GSS) visit: www.gss-contracting.com

BE Monthly | 137

Seven decad

One of the world’s leading elec is doing more today than ev and future needs of its custo

written by: Will Daynes |

138 | BE Monthly

Endesa

des of power

ctric power companies, Endesa ver to provide for the present omers all around the world

research by: Dave Brogan

BE Monthly | 139

Endesa

E

stablished in November 1944, its top priority. This attitude also refers to with the construction of the the company’s commitment to economic and Compostilla thermal plan in social development in the countries in which Ponferrada, in the province of it does business. Its ability to stay true to its Leon in Spain, Endesa is today values is credited to the work of its 23,000 one of the largest electric power companies professionals located across the globe. in the world. As well as being Spain’s largest In addition to its strong market position in utility company, it is also the leading private the electricity and gas sectors, Endesa also multinational enterprise in Latin America holds a position in several other important and a major player in the gas sector. industries. In Spain it operates within both Over the course of almost 70 years the the regulated and deregulated natural gas company has steadily grown and evolved to sector segments, primarily in the distribution the point where it now boasts operations in of gas and the sale of natural gas and eight countries across Latin America, Europe integrated services. Endesa’s activities in this field, which also include and Africa. Throughout each of these operations Endesa storage, regasification and works diligently to identify LNG transport projects, are intelligent solutions that conducted by its subsidy, will help it develop realistic Endesa Gas which has proposals to address present interests in various transport and future energy challenges. and distribution companies.

In total the company In Spain Endesa also Customers served by possesses four coal mining provides services to more Endesa across the world than 25 million customers, operations at As Ponte, with 141,434 GWh of power Andorra, Puertollano, generated and 162,490 GWh sold in 2012 and Peñarroya. In 2012 the company alone. In Spain, Portugal and Morocco extracted a total of 810,000 tonnes of coal its offerings include power generation, from these assets, a quantityequivalent to distribution and supply, while in Latin 2,787 million therms.

As proof of Endesa taking its role as an America it provides power generation, transmission and distribution data to international energy company seriously, customers in Argentina, Brazil, Chile, the company aims to supply its clients with Colombia, Peru and Central America. high-quality services in a responsible and Endesa’s self-proclaimed “Blue Attitude” is efficient way. This means not only making a what it describes as its commitment to people. profit for its shareholders, but also building By listening to its customers and striving to up the professional training of its employees, establish constructive dialogue the company participating in the development of the social is able to ensure that their interests remain environments in which it operates, and using

25+

Million

BE Monthly | 141

Endesa

“Endesa works diligently to identify intelligent solutions that will help it develop realistic proposals to address present and future energy challenges” the natural resources it needs for its activities in a sustainable way.

The company is equally as aware that in order to maintain its market-leading position and reinforce it going forward it is essential for it to perform its economic, social and environmental responsibilities on the basis of sustainability criteria.

One example of the company’s efforts to deliver a sustainable future is through the

work of Enel Green Power, a subsidiary of its parent, the Enel Group. Enel Green Power is an entity fully dedicated to the development and management of renewable energy sources at an international level, with operations in Europe and the Americas. The company generated more than 25 billion kWh in 2012 from water, sun, wind and the Earth’s heat, enough to meet the energy needs of approximately ten million households and

BE Monthly | 143

avoid the emission of over 18 million tonnes of CO2 into the atmosphere.

Enel Green Power is a world leader in the sector thanks to its well-balanced generation mix, providing generation volumes well over the sector average. As of today, the company

has an installed capacity of 8,700 MW from a mix of sources including wind, solar, hydroelectric, geothermal, and biomass.

Currently, the company has around 740 operational plants in 16 countries in Europe and the Americas.

“Endesa’s ability to stay true to its values is credited to the work of its 23,000 professionals located across the globe”

144 | BE Monthly

Endesa

In Latin America, Enel Green Power runs renewable energy plants in Mexico, Costa Rica, Guatemala, Panama, Chile and Brazil for a total installed capacity of 990 MW. In the wind sector, the company is currently building wind farms in Brazil for a total capacity of around 283 MW and has 24 MW installed wind capacity in Costa Rica, 144 MW in Mexico and 90 MW installed in Chile, where the company is also constructing the 90 MW “Valle de los Vientos” and the 99 MW “Taltal” wind farms.

Earlier this year, in March 2013, the company announced the outline for its

2013-2017 Strategic Plan. The strategic priorities for the business in Spain and Portugal will focus on dealing with the heightened regulatory framework by streamlining assets and cutting costs.

Meanwhile, the 2013-2017 Strategic Plan for the business in Latin America will focus on reinforcing the company’s dominant position by exploiting growth opportunities.

For more information about Endesa visit: www.endesa.com

BE Monthly | 145

zesco

Powering Zambia Zesco, Zambia’s national power provider, has been beset by problems, many of them a legacy of under investment and piecemeal growth: but these are now being addressed head on and state of the art technology is the order of the day

written by: John O’Hanlon research by: Robert Hodgson

BE Monthly | 147

Cyprian Chitundu, Managing Director

zesco

T

he first mains electricity that Zambia Electricity Supply Corporation flowed in Zambia came from a Limited (ZESCO) is Zambia’s state-owned small coal fired station in the power company, a business that operates capital Livingstone, but even more like an independent company than a that did not cover the entire city. government department: adopting the model Zambia had to wait till 1938 to get its first commonly followed in Africa it is known as hydro-electric power from that mighty power a parastatal. So it is governed by a board of source, the Victoria Falls. Of course the copper directors that is appointed by the government, mines needed power, but up to the middle of with wider consultation with stakeholders, the last century they had to provide their own and with the participation of the private generation facilities. This meant that a number sector. It is Zambia’s largest power company of local authorities distributed electricity in producing about 95 percent of the electricity their own districts obtaining their supplies in consumed in the country. the main from existing power stations. For To act as a big corporation in a nearinstance, Livingstone local authorities bought monopolistic industry is a difficult task, admits power from the Victoria Zesco’s Managing Director Falls Electricity Board while Cyprian Chitundu. The only Kabwe and the Copperbelt time the customer really authorities purchased power notices their power supplier is from the mining companies when there’s a problem, and Zambia’s peak which they were often able Zambians are given plenty power demand of opportunity to notice that to sell local municipalities. there are frequent power But real consolidation did not take place until the early 1950s when outages. This, he says, is because the system at least four stations with a combined 120 is under stress. There is an under-capacity MW capacity were connected to a central within the country, and rationing has been switching station at Kitwe. necessary to ensure that every Zambian who With the construction of the Kariba is connected to the grid has a fair share of Dam and power station in 1962, and the the available power. To illustrate the situation, subsequent development of the 990 MW national demand for power, at peak times, is Kafue Gorge power station the copper mines more than 1,780 MW: Zesco’s total capacity finally had a source of hydroelectric power is 1,700 MW, leaving a deficit of around that was sufficient to supply Zambia’s major 165 MW, allowing for a safety margin. population centres as well. A power supply But that is no substitute for a reliable and network began to extend across the country continuous supply, he would be the first to and today this carries electric power to all acknowledge. “It is with this in mind that we but the most remote and inaccessible parts have adopted an action oriented strategy that of the country. will ensure that three years from now the

1,780 mw

BE Monthly | 149

Weekly Because a month is a long time to wait...

Your weekly digest of business news and views www.bus-ex.com

zesco Zambian people will be well catered for and absolutely Two Rabbits Ltd is a proudly Zambia owned and operational free of power rationing.”

Branding company. We specialize in all types of branding With the government backing and works are down in-house. Embroidery, screen printing, it by facilitating external Embossing, engraving, large format printing. investment partners, this Our Clients see us as an important resource and integral will, he hopes, get a number part of achieving their goals. Understanding our client specific goals is our top priority. We are extremely of projects moving that have committed and focused on this concept and continue to been stalled for up to ten tailor the way we do business in order to help you achieve years. After all, he points exceptional results. out, the very demand for With Two Rabbits Embroidery as your Branding partner, you electricity that is causing can be confident that you are building a solid affiliation with supply problems has only an organization you can trust and count on. come about through Zambia’s www.tworabbitsgifts.com economic boom.

2012 was a good year for Zambia’s economy. Growth was driven by expansion in agriculture, construction, manufacturing, transport and finance.

Economic prospects for the future look positive so long as growth can be sustained and broadened to accelerate job creation and poverty reduction. After a slump in output, copper mining is expected to rebound in 2013, and is projected to reach 1.5 million tonnes by 2015. This is largely due to investment in new mines and the expansion of capacity at existing plants. Robust international copper prices will provide additional stimulus to mining. But that expansion very much depends on the availability of a robust power infrastructure, and that is Zesco’s challenge.

Chitundu has identified eight key factors that need to be addressed as part of the action plan and number one on the list is to put an end to loadshedding, a polite name for sharing out blackouts as a way of keeping the lights on for most of the customers. Among Minister of Finance touring the KNBE project

TWO RABBITS EMBROIDERY LTD

BE Monthly | 151

the remaining objectives are to increase working capital, control costs and increase the customer base. But fairness to the customers is a thread running right through the policy, and one of the key perceived inequitable factors is the non-availability of power in some rural and remote parts of the country.

To address this Zesco is working with the government of Zambia, the United Nations Industrial Development Organisation

(UNIDO) and the Global Environment Facility (GEF), and has embarked on a project to develop isolated mini-hydro power stations to mitigate the power deficit in rural areas. One such project is the one-megawatt Shiwang’andu mini-hydro power project which was commissioned in December 2012.

An important objective of the project was to promote renewable energy based on mini grids for rural electrification in the country.

“The investment in the Fibrecom network is a great achievement by ZESCO with immense social, technological and economic benefits”

Work in progress at KNBE

152 | BE Monthly

zesco

Kariba dam

The Shiwang’andu project is not connected to the national grid – it is purely a local facility, so the buy-in from the people who will benefit is considerable. The project has created employment opportunities for 70 local general workers. The isolated mini grid will connect to the schools, clinics, lodges and farms which will bring economic development to Shiwang’andu area.

While Zesco is implementing its large scale improvement programme, it is not all about fighting fires. The company recently launched the second phase of its fibre optic network after completing the installation of 5,300 kilometres of optic fibre cable on its high voltage lines. Phase one brought high capacity ICT to 46 towns in every one of Zambia’s ten provinces. “The investment in the Fibrecom

network is a great achievement by Zesco with immense social, technological and economic benefits,” said Cyprian Chitundu.

Phase 2 extends coverage by a further 4,300 kilometres, with international connections to Tanzania and Namibia. The network is also being equipped with real-time remote surveillance systems, with access control at key installations on the Fibrecom (Zesco’s own brand) network. This, says Chitundu, will address the bane of vandalism, which is responsible for many of the outages that the customers currently blame on Zesco.

For more information about Zesco visit: www.zesco.co.zm

BE Monthly | 153

154 | BE Monthly

Henkel South Africa

Sticking to what’s best During the course of Henkel South Africa’s history it has consistently displayed a commitment to sustainability and its ever-growing importance to the Sub-Saharan market

written by: Will Daynes research by: Paul Bradley

BE Monthly | 155

Henkel South Africa

F

ounded in 1876 and today headquartered in Düsseldorf, Germany, Henkel is a recognised holder of globally leading market positions in the consumer and industrial businesses. Boasting a host of reputable brands including Persil, Schwarzkopf and Loctite, Henkel has some 47,000 employees operating throughout the world across the group’s three business sectors; laundry and home care, beauty care and adhesive technologies.

In the last of these categories Henkel is undoubtedly at the top end of the market when it comes to delivering adhesives, sealants and surface treatments to consumers and craftsmen, and for a wealth of industrial applications.

Part of the group’s Europe, Middle East and Africa region, Henkel South Africa is seen as one of, if not the major player when it comes to adhesives in Southern Africa. The company’s operations cover a wide customer base including companies operating in the industrial, automotive and metal industries, all of whom it serves from its manufacturing facility in Johannesburg.

Much like the wider Henkel group, Henkel South Africa has built its reputation on delivering good consistent results and its ability to compete across various applications and technologies is something that industry watchers have come to know and respect.

Having its own manufacturing facility is another important positive for the company. What it has found with many of its competitors is that they rely on importing products into the marketplace. This can

BE Monthly | 157

Bidvest Panalpina Logistics Bidvest Panalpina Logistics and Henkel recently entered an agreement with BPL implementing a dedicated warehouse management solution.

Strategically located in 25 facilities across South Africa, BPL has a combination of dedicated and multi-user warehousing including both free and bonded storage.

Our experience and understanding of complex supply and demand chains allows us to synchronise cargo flows through our infrastructure, inclusive of airfreight and ocean freight, forwarding and clearing, customised warehousing, transport and distribution solutions, the objective being to increase overall

efficiency of clients’ particular logistics requirements. BPL offers an integrated logistics service in all aspects of the global and local supply chain.

E. info@bpl.za.com www.bpl.za.com

Henkel South Africa

have a negative impact, particularly in confidence is that fact that it believes that difficult economic times, when you consider its superior products, brands and technology, factors like the highly volatile interest and together with its competitive internal cost currency rates that we have experienced in structure, can carry it through the more recent years. What this means for Henkel challenging times.

South Africa is that by manufacturing Don’t take this to mean however that this locally it actually benefits from significant is a company prepared to rest of its laurels.

Indeed there is a great deal happening cost advantages in the long run.

While the company did experience strong throughout Henkel South Africa to not only business growth in the respond to today’s market years immediately following conditions, but also to better 2008, it is correct in saying equip it for the future. Over that the current global the last two and half years economic climate has called the company has been for a more conservative involved in an important Henkel employees outlook. Nevertheless, what logistics redesign project across the world gives Henkel South Africa with the aim of reviewing

47,000

BE Monthly | 159

Memcon (Pty) Ltd Memcon (Pty) Ltd in conjunction with Henkel South Africa engineered and manufactured a customised membrane filtration plant. This world class automated MF Plant processes waste water streams from all the production lines within the manufacturing facility ensuring acceptable municipal discharge limits 24 hours a day.

Upgrades to the existing plant can be made to further improve the water quality to fresh water standards for reuse in the manufacturing facility.

Technology is based on cross flow filtration principles utilizing ceramic membranes; unlike dead-end filtration the cross flow velocity through the plant

causes the feed liquid in circulation to scour the surface of the membranes creating a constant cleaning effect with minimized chemical cleaning.

Modular design allows for any flow rate with capacities which can be increased at a later stage by adding more modules.

E. info@memcon.co.za www.memcon.co.za

MEMCON Total Process Solution® (MTPS®) provides customised membrane technology solutions for liquidliquid and liquid-solid separation.

MEMCON membrane systems can mechanically separate any kind of liquid into valuable and unwanted substances as part of the client’s production or effluent processes.

MEMCON’s comprehensive laboratory and pilot plant equipment are used to assist in feasibility studies and project costing forecasts.

Customer Benefits: Legal environmental compliance with reduced operational expenditure by designing a technical solution that guarantees compliance with environmental legislation (Local and International).

Reduced Total Cost of the client’s operational process (lowering operational expenses, recovering valuable substances back into client’s process, i.e. fresh water). www.memcon.co.za | +27 11 534 3938 | info@memcon.co.za M I C R O F I LT R AT I O N | U LT R A F I LT R AT I O N | N A N O F I LT R AT I O N | R E V E R S E O S M O S I S | M B R

Henkel South Africa

the whole of the company’s investments throughout the business where possible, logistics chain.

At its most complex, the perhaps the best recent example being the capital it company’s logistics chain previously involved working has spent to install a series Year Henkel was founded with some 17 different service of new effluent filtration and logistics suppliers. What plants. Taking up a space of it has done now is to redesign just 3x5 metres these plants the entire logistics model of the country will take used water and reduce its effluent and it is currently looking to find service content be up to 100 times, thus allowing providers who would be capable of covering the filtered water to be completely reused. the whole of that model. Successfully doing so This investment is another example would of course bring cost savings to Henkel of Henkel’s global strategy to improve South Africa, however the biggest and most its sustainability footprint being put important beneficiaries would be efficiency into action. Considering the geographic and customer service. markets that it operates in, the company Meanwhile, Henkel South Africa has found its sustainability credentials has continued to look to make positive have become a significant point of sale.

1876

BE Monthly | 161

“the African market needs to be approached with due care, research and understanding, and that is precisely the way the business operates�

With South Africa being something of a dry country developments like its use of these eff luent filtration plants are all the more important, not only for its reputation as a responsible company but for the communities in which it operates.

Across the wider Henkel group there is a major global rebranding initiative currently

162 | BE Monthly

going on,with the aim of reducing the complexities that arise from possessing a huge portfolio of trade and brand names.

As recently as early July the first Henkel business unit kicked off its rebranding activities. The process Henkel is involved in involves reducing its total brand portfolio to five major brands that all other products

Henkel South Africa

will then be grouped into. This is obviously a major logistical expertise and one that it is very focused on throughout the organisation at present.

Southern Africa, south of the Sahara, is of considerable strategic importance for Henkel and as such it has been working extensive over the last two-to-three years to evaluate the opportunities the market has to offer.

The company has always understood that in order to grow accordingly it needs to first identify applications or markets that best suit its operations before targeting them. What it also knows to be true is that the African market needs to be approached with due care, research and understanding, and that

is precisely the way the business operates.

This methodical approach has enabled the company to successful expand upon its export side of the business to other important African markets and it such growth that Henkel South Africa is clearly focused on. Going forward it will continue to use all of the strengths at its disposal in terms of brands, technologies and innovation in order to identify those areas in which it can grow, while also retaining its competitive advantage.

For more information about Henkel South Africa visit: www.henkel.com

BE Monthly | 163

Ghana Rubber Estates Ltd

The substance

of tyres

With primary exports to the European market, and the main buyer being tyre manufacturer Michelin, Ghana Rubber Estates Ltd (GREL’s) international footprint and customer base is rapidly expanding

written by: John O’Hanlon research by: Paul Bradley

BE Monthly | 165

Collecting rubber sap from tree

Ghana Rubber Estates Ltd

G

hana Rubber Estates Ltd. smallholders taking part in this scheme.

(GREL) started life in 1957, The model is that each outgrower plantation the year Ghana declared its covers four hectares and is run by a single independence from Britain family, planting one hectare per year. The and became the first African reason for this planting strategy is to allow country to free itself from colonial rule. outgrowers to grow both a cash crop and a The company’s assets at the time of its food crop in parallel. It is a good deal for establishment consisted of a comparatively these families, who have the security of a small private plantation, known as Dixcove commitment from GREL to purchase their and owned by R T Briscoe. In those days it rubber output for up to 35 years – the entire covered an area of 923 hectares at Abura in producing life of a rubber tree.

The phase four expansion is now complete the Western Region of the country, however it was nationalised only three years after and, like its predecessors, was supported independence, becoming a state farm. Since by Agence Française de Développement. then private interest has been It involved planting in the reintroduced with various region of 10,000 hectares of rubber. Phase five is now offtaking tyre companies, the end users of the product, well under way and will run taking a shareholding. The for three years during which time GREL will be working government of Ghana still Outgrowers supported has a 25 per cent holding. with over 4,000 outgrowers

by GREL GR E L has g row n to plant a further 13,500 hectares. Managing Director progressively over the intervening years and today, with its Lionel Barre estimates that within three to headquarters at the western city of Takoradi, four years the scheme will cover around it farms the largest industrial rubber estate 40,000 hectares and that these farms will in Ghana, owning more than 18,000 hectares produce up to 70,000 tonnes of rubber per of rubber plantation, of which approximately year, once the trees have matured between half is made up of mature trees. GREL’s 2020 and 2023. Going forward GREL wants annual revenue is in excess of $80 million, to add 2,300 hectares to the outgrower generated from an output of more than estate each year.

At the same time as expanding the 20,000 tonnes of granulated, or crumb rubber per year. In addition to the rubber it amount of land managed by outgrowers, processes from its own operations, GREL had as we reported last year GREL is also developed an outgrower programme since expanding and replanting its own estates.

1995. This programme has been expanded “We have a programme of investment of in three phases, with a fourth currently around €25 million for our entire estate in taking place. There are more than 5,600 terms of extension and planting over the

5,600

BE Monthly | 167

• Internet Service Provider • Electronic Security Solutions • Communications Networks • IT Support Services • IT Procurement • Communications Convergence

We focus on service excellence Service excellence is what we strive for and has become a part of our company culture.

It’s how we think and act. It’s not just “solving a problem” or performing a routine task.

WE DELIVER – a complete IT service Solutions to suit YOU We offer world class solutions and services in various technology sectors. Because we are a complete IT services provider, customers can expect a professional engagement that is time bound, offers efficiency and stability, and use of latest technology standards.

WE UNDERSTAND - your technology needs ICT Services CTSL recognizes the increasingly rapid pace at which technology advances, resulting in a rapid decrease in the lifespan of technological inventions.Our expertise helps your business communicate using advanced communication technologies with the flexibility to offer a wide range of services which are scalable, cost effective and can be deployed rapidly.

SPECIALITIES: • Internet Service Provider • Electronic Security Solutions (CCTV, Access Contol, Perimeter) • Data Voice and Video Communication Networks • IT Support Services

www.ctslafrica.com | info@ghanats.com | Tel: (+233) 3120 26124

Ghana Rubber Estates Ltd

Worker on the plantation

“Out ICT platform has been upgraded, with all our remote sites hooked unto the head office network” coming five-year period,” said Barre. This expansion in the company’s assets is a reflection of increasing demand globally.

“Today, worldwide consumption and production are almost the same, between 10.5 million and 11 million tonnes per year, but the demand is growing very fast: China is consuming basically 30 to 35 per cent of global production already and is growing very fast, as are India, Brazil, Turkey and Nigeria. But these countries, especially

India and China, are not really suited to producing their own rubber crops, so that is a big opportunity for us in Ghana.”

So for the future, GREL’s focus is firmly on expansion. “By 2020 we will be tripling the size of our factory, which means that we will have the capacity to produce 50,000 to 60,000 tonnes per year, compared to 20,000 today, “ Barre said last year. As he predicted in 2012, an additional 4,000 hectares have since been added to the company’s own

BE Monthly | 169

holding, and in addition, “The Rubber Outgrower Plantations Project, of which we are the Technical Operators, will assist 4,000 farmers to plant 12,000 hectares. In 2013 alone, the target is to assist 2,000 farmers to plant 4,000 hectares.”

To cope with the anticipated increase in volume of the raw materials that will have to be processed, the expansion of the factory has been prioritised. Its capacity will grow

to 60,000 tonnes by 2018. Other investments such as housing, expansion of the factory buildings, new power generation plant, and the construction of warehousing are being carried out. The total cost of this will amount to about €6.5 million, he says. Nor have the ancillary services been neglected: “A new state-of-the-art laboratory to check the quality of our produce has been completed. Also we have trained four managers as industrial

“The Rubber Outgrower Plantations Project will assist 4,000 farmers to plant 12,000 hectares”

Out on the plantation

170 | BE Monthly

Ghana Rubber Estates Ltd

A tapper at work

engineers so they will be qualified to conduct periodic studies to enable us improve on our current procedures and processes. Also we have introduced the NR standard in our factory and training is taking place on the shop floor to improve productivity.”

Another important initiative has been to update the back office systems. “Out ICT platform has been upgraded, with all our remote sites hooked unto the head office network. A software program has been developed to enable us track our processes with great accuracy For example the remuneration system for rubber bought from farmers has been automated in such a way

that the speed of payment has improved: the target is to pay farmers within two hours from the time they drop the rubber at our factory.

A sales module has also been developed to enable us to better monitor and track the information supplied to our outgrowers.”

Working with partners like CTSL Africa, a Takoradi based company that is well versed in the implementation of large scale ICT and Integrated Security Solutions (ISS) projects to government, parastatal, corporate and NGO organisations throughout Africa, GSEL and its growers are today working on first-world level technology platforms.

Improvement initiatives like these, and the

BE Monthly | 171

CHEMICO LIMITED Q U A L I T Y P R O D U C T, Q U A L I T Y S E R V I C E

CHEMICO Ltd is a 100% Ghanaian-owned business. We are a leading importer of agrochemicals and fertilizers and also distributors of feeds and veterinary products in the poultry and livestock industry.

• FERTILIZER BLENDING The first Company with a fertilizer blending plant in Ghana for providing specific fertilizer grades for specific crops.

• AGROCHEMICAL FORMULATION CHEMICO is the only agrochemical formulator in Ghana, and formulates the following classes of products, Insecticides and Foliar fertilizers.

• REPACKING Chemico also has facilities to repack agrochemical powders and liquids.

T: 233-303-202991, 202992, 202345, 206548 F: 233-303-202000 E: chemico@chemicogh.com

Ghana Rubber Estates Ltd

Head office

efforts the company has been always been important to making to refine the logistics GREL, and is very much and transition of materials encouraged by the culture between the plantations and of its parent group, SIFCA, the factory have already based in Abidjan, Cote Tonnes per year target started to show positive d’Ivoire and one of Africa’s factory capacity by 2018 results, adds Lionel Barre: biggest agro-industrial firms. The company runs an “We have cut down on the transport of labour and raw materials from apprenticeship scheme, aiming to recruit the plantations to the factory. We have been new graduates, many of them having able to predict our needs more accurately in already completed internships with GREL. terms of trucks, number of people, and other There are opportunities to gain experience infrastructural requirements especially where in other countries where the group operates, the newly acquired acreage is concerned. such as Nigeria, Liberia, Cote d’Ivoire and Training and the transfer of skills has Ghana itself. A training unit within the HR

60,000

BE Monthly | 173

Collection of cup lumps

department circulates all departments at the beginning of each year to ascertain the skill enhancement appropriate to each individual, and based on this a mentoring and tutoring programme is drawn up and implemented.

The automotive industry that is the main end user for the rubber supplied by GREL may not be the most environmentally friendly, but rubber production as practised in Ghana is a green industry. Plantations of rubber trees

sequestrate CO2. The plantations therefore act as a carbon sink. “Rubber trees have an economic life of 35 to 40 years,” Barre reminds us. “GREL has entered into an agreement with a company called Takoradi Renewable Resources Limited (TRELL) that is felling our old trees and processing them into chipboard. The field is then replanted.”

By-products can be used as biofuel to produce green energy. Furthermore, as part of GREL’s

“As part of our environmental charter... we avoid ecologically sensitive zones where planting would disturb the ecology” 174 | BE Monthly

W

Ghana Rubber Estates Ltd

Weed control at GREL plantations

contribution towards food security, it has a unit that provides technical assistance to farmers who want to adopt good agricultural practices, enabling them to increase their food output per unit area. GREL has signed an agreement with a social agricultural enterprise to use its premises as a learning centre for its rubber farmers in both animal and crop farming. This initiative will cost in the region of €80.000, he says.

And as well as providing high levels of direct employment, and helping a huge number of farmers to achieve long term financial security, it directly supports a number of social initiatives. The communities affected

by GREL’s activities have grouped together to form an association called ‘ACLANGO” (Association of Chiefs Land on which GREL

Collection of latex

Operates) through which all community developmental projects are channelled.

Projects such as schools, clinics and water boreholes are undertaken for them and under a scholarship scheme GREL sponsors 14 children every year. “We have a charter on social, HIV/AIDS, Environment, Health and Safety which all employees strictly adhere to,” Barre concludes. “For example, as part of our environmental charter we have stopped planting in wet lands, and we also avoid ecologically sensitive zones where planting would disturb the ecology.”

For more information about Ghana Rubber Estates Limited visit: www.grelgh.com

BE Monthly | 175

176 | BE Monthly

Port Authority of Jamaica

Ports in

a storm

We look at the work of the Port Authority of Jamaica (PAJ) and the implications for the strategically vital Kingston Container Terminal

written by: John O’Hanlon research by: Robert Hodgson

BE Monthly | 177

Port Authority of Jamaica

W

ith limited natural resources and not much in the way of large manufacturing industries Jamaica is reliant on its tourist trade, the agricultural products, notably bananas, for which it has become famous, and its service industries. Its ports are naturally the focal point of the tourist industry, however the capital Kingston is also the main trading port of the country. It is home to the strategically important Kingston Container Terminal (KCT), a facility that is expected to boost Jamaica’s importance in the region at precisely the time the regional shipping trade is being transformed by major expansion of the Panama Canal.

Within PAJ’s remit there are three major international ports - the Kingston Container Terminal, the Port of Montego Bay and the Port of Ocho Rios. The Port Authority of Jamaica acquired the Port of Montego Bay in 1986.

It is the island’s second international port.

Port Handlers Limited, a private company, manages the port through a management contract. This fiscal year the company is expected to turn over $108 million.

Owned by the Authority itself and operated by its subsidiary Kingston Container Terminal Services Ltd, the Kingston Container Terminal has established an enviable position as the premier container transhipment hub in the Caribbean. It lies on the main shipping route for traffic entering and exiting the Panama Canal. Already a major contributor to GDP growth, KCT is the feather in the Port Authority’s cap.

The Port of Kingston, as well as being

BE Monthly | 179

Coloured Fin Limited In 1989 Coloured Fin Limited was established and registered as a limited liability company in accordance with the Laws of the Republic of Trinidad and Tobago, in recognition of the growing need for towage and other services in the shipping industry in Trinidad and Tobago in particular and the wider Caribbean in general.

Coloured Fin Ltd was established with six employees headed by Chairman Capt. Stanley S. Mathurin a Master Mariner. The Company now has 300 permanent and 38 contracted employees consisting a cadre of qualified and highly experienced Masters, Navigating Officers, Engineers and Crew.

The Company, in addition to its towage, water delivery, passenger and Courier services (supplies etc.) to vessels outside the territorial waters of Trinidad and Tobago, provides line handling launches and crews at the LNG terminals at Point Fortin and Point Lisas.

The Company’s goal is to be the foremost provider of ship management, towage, passenger, water delivery, courier and sale and purchase services in the Caribbean, with a fleet of well maintained, equipped and professionally operated vessels at competitive prices.

E. info@colouredfin.com www.colouredfin.com

COLOURED FIN LIMITED Coloured Fin Limited’s services include the following: • Berthing and Unberthing • Towing and salvaging services • Line handling / Crew boats • Drill / potable water deliveries • Courier services- Charts, stores, spares etc delivered outside of territorial waters • Marine Management • Slops Removal Tel: 868 634-4834 Email: info@colouredfin.com www.colouredfin.com

Port Authority of Jamaica

the gateway to Jamaica’s capital city, is the seventh largest natural harbour in the world.

Kingston Harbour consists of an almost completely landlocked area of water, roughly ten miles long and two miles wide. Much of this water, even close to shore, is deep enough to accommodate large ships. As a result of this, over the years following its establishment in the early 17th century very many wharves and finger piers – jetties built

at right angles to the shore - were constructed within the Port of Kingston.

One of the great disadvantages of the old finger-piers was that they concentrated a large number of ships on a relatively small area of shoreline. This might have been advantageous in a harbour short of deep berths and adequate access routes, but it proved a crippling disadvantage to Kingston, whose roads leading to the harbour had not

“The widening of the Panama Canal will have a transformative effect on the regional port and shipping industry” BE Monthly | 181

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Port Authority of Jamaica

been designed to take this kind of traffic. of which was completed in 2009. With a By the mid-1950s it was obvious that some current capacity of 2.8 million TEUs (twenty solutions would have to be found for the foot equivalent container units) the port is problems of Kingston’s port, which was ready for expansion up to 3.2 million TEUs becoming increasingly inadequate for the in its current configuration by converting rising quantity of goods flowing through it. available land into further container storage Work on the new port began in 1964. space. The site has three operating terminals, Engineering work went on throughout 1965. each of them dredged to a depth of 13 metres The first ship docked at Newport West in and equipped with the latest materials 1966 and by 1971, the old piers had mostly handling gear as well as a computer-aided been abandoned. To open Newport West, the management system for both operations and SS United States, one of the maintenance. Equipment largest ships to visit Jamaica includes 19 ship-to-shore up to that time, docked there gantry cranes, with four on February 14 1966. super Post-Panamax KCT has gone through cranes among them; 30 a number of expansions stevedoring chassis; 28 Moves at KCT in FY 2011/12 and improvements, the last yard tractors; 30 yard

977,144

BE Monthly | 183

trailers; two 4,000 horse-power tugboats; 73 straddle carriers; 24 trailer trains; four train tractors, and nine forklifts.

In 2011/12 the terminal handled a total of 977,144 moves, around ten percent short of its target and of the previous year’s performance, and this brought the opportunities to be derived from the impending Panama Canal Expansion were brought into sharp focus, said PAJ chairman Noel Hylton.

“The expansion is of seminal importance as it stands to change the characteristics of the regional containerised cargo trade.”

It will result, he predicted, in realignment of trade routes serving key markets in the western hemisphere, as shipping lines consolidate operations to seize the benefits from economies of scale and shift operating capacity to all-water services as a means of serving the North American markets. “The widening of the Panama Canal will have a transformative effect on the regional port and shipping industry and will result in the introduction of ultra-large ships and the emergence of a regional mega-hub. The expansion project will enable large vessels of up to 12,000 TEUs to access the Central America and Caribbean Region from the Far East via the Panama Canal.”

Hylton is convinced that this will result

in an increase in the average size of vessels operating across the region, with shipping lines calling at fewer ports so as to maximise the cost advantages from the enlarged ships.

“The lines have already begun to undertake steps to rationalise their operations into a single hub,” he says. “Given the Port of Kingston’s strategic geographical position, there is an immense opportunity for it to become a mega hub.”

“Given the Port of Kingston’s strategic geographical position, there is an immense opportunity for the port to become a mega hub” 184 | BE Monthly

Port Authority of Jamaica

The Port of Kingston has several strategic advantages. It is the only port in the Central American and Caribbean region that has experience in handling 10,000 TEU ships. Strategic investment over the years means that KCT in particular is now ahead of its regional competitors with larger terminal area, more ship-toshore gantry cranes and greater berthing capacity. “Kingston offers less deviation as it is ideally located on major shipping routes, specifically the North-South course from Panama to the US East Coast.” Hylton points out. “The Caribbean Transhipment Triangle – from Freeport in the North to Kingston in the West and Port of Spain in the East, indicates our strategic position for cargo exiting the Canal.”

All major works under the Fifth Phase Expansion project to lift KCT’s capacity from 1.5 million to 3.2 million TEUs have now been completed. And more land will be acquired as it is needed for operations. The expansion project that will double Panama Canal’s capacity from its current 300 million tonnes a year is due to be completed in the first half of 2015. It will boost not only PAJ’s container business but also its very important cruise market, which remained more profitable during the recession period than did its cargo volumes.

For more information about Port Authority of Jamaica visit: www.portjam.com

BE Monthly | 185

186 | BE Monthly

PortMiami

Welcome to America It is easy to see why PortMiami has earned the nickname, the Cargo Gateway of the Americas

written by: Will Daynes research by: Adam Kalynuk

BE Monthly | 187

Cruise ship at the port

PortMiami

M

other Nature has shown time and again that she possesses the power to both amaze and terrify in equal measure.

Nevertheless, what we have also seen on numerous occasions in the past is that mankind has the ability to take the most disastrous of events and turn them into something positive.

Such an event occurred in the early 1900s in the south-eastern United States, when a particularly powerful hurricane struck the city of Miami. Such was the devastating force of this storm that it split the southern end of Miami Beach, creating what would become known as the Government Cut shipping channel and Fisher Island.

Shortly after the hurricane the cut was dredged creating new access to the mainland through what became known as the Main Channel. This ultimately led to a huge improvement in shipping access to the existing port. In the decades that followed the port grew in size as shipping access continued to improve and the South Florida community expanded in size and range.

It was on 5 April, 1960, that the Dade County Board of Commissioners approved Resolution No. 4830, “Joint Resolution Providing for Construction of Modern Seaport Facilities at Dodge Island Site�, which was subsequently approved by the City of Miami the following day. It was this landmark event that gave way to the construction of the new Port of Miami.

Construction of the new port, located on the artificially created Dodge Island, began shortly thereafter with the island itself also being expanded and linked to others in

BE Monthly | 189

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vincent@bus-ex.com 190 | BE Monthly

the general vicinity. The undertaking itself was a massive task, one that involved the construction of new seawalls, transit sheds, administrative buildings and a new vehicle and railroad bridge.

Today, PortMiami, as it is now officially known, is recognised as one of the busiest container ports in the United States.

Accounting for more than 207,000 jobs and with an annual economic impact in Miami of some $27 billion, the port is also referred to in the maritime sector as the “Cruise Capital of the World”, with one in seven of all the world’s cruise passengers starting their journeys at the port. Indeed, in 2010 a record 4.33 million passengers travelled through the port.

For well over two decades the port has

PortMiami

Cranes and container terminal

retained its status as the number one cruise/ passenger port in the world, accommodating the largest cruise ships in the world and the operations of many of the world’s largest lines including Carnival, Royal Caribbean and Norwegian Cruise Line. In catering for such visitors the port currently operates eight passenger terminals, six gantry crane wharves, seven Ro-Ro docks, four refrigerated yards for containers, break bulk cargo warehouses

and nine gantry container handling cranes.

Retaining its competitive edge as a world-class port has not been an easy task for PortMiami and has required considerable investment over the years. In 1997 the port underwent a comprehensive redevelopment programme at a cost of more than $250 million.

As part of the programme, new ultramodern cruise terminals, roadways

“Construction on the Miami Port Tunnel, a $1 billion project that will connect the port to other major highway arteries began in May, 2010�

BE Monthly | 191

“the Port of Miami Deep Dredge project could double Miami’s cargo business in the next ten years as well as creating over 30,000 permanent jobs”

Presidant Obama’s visit to PortMiami

192 | BE Monthly

PortMiami and parking garages were constructed. Additionally, a new gantry crane dock and container storage yards were introduced along with the electrification of the gantry crane docks to include the conversion of several cranes.

In addition, the Port acquired two state-of-the-art super post-panamax gantry cranes which are amongst the largest in the world and are able to load and unload 22 container (8 foot wide each), or nearly 200 foot, wide mega container ships. This development will contribute towards making it possible for PortMiami to facilitate even the future largest containerships in the world, the Maersk Triple E Class.

As we look at PortMiami today there are several major infrastructure projects relating to the port which are all scheduled to be complete by 2014. These include the Port of Miami Tunnel, the Port of Miami Deep Dredge Project and the restoration of the bridge and rail line connecting the port to the mainland.

Construction on the Miami Port Tunnel, a $1 billion project that will connect the port to other major highway arteries began in May, 2010. Meanwhile, the Port of Miami Deep Dredge project is one of considerable importance, seeing as its construction will allow Super Post-Panamax Megaships to

Aerial view of the Miami Port Tunnel

enter the United States after the completion of the Panama Canal expansion in 2014.

With the correct funding, the Port of Miami estimates that it is capable of completing such a project by 2014. It is also estimated that this project could double Miami’s cargo business in the next ten years as well as creating over 30,000 permanent jobs for the city.

For more information about PortMiami visit: www.miamidade.gov/portmiami

BE Monthly | 193

Cross

194 | BE Monthly

AlpTransit Gotthard AG

ssing new frontiers CEO, Marco Ceriani, discusses the creation of the New Rail Link through the Alps (NRLA), a project that has been dubbed ‘the construction of the century’

written by: Will Daynes research by: Abi Abagun

BE Monthly | 195

Construction of the railway systems building and ventilation centre at the Faido portal has been in progress since 2012

AlpTransit Gotthard AG

T

ruly a natural wonder of our planet, the Swiss Alps have been attracting tourists from across the world since long before the construction of the first hotels and mountain huts in the mid eighteenth century. This continues to this day with the Alpine area as a whole attracting some 100 million visitors each year.

The Alps themselves cover some 65 percent of Switzerland’s surface area. Looking at that statistic alone it is perfectly understandable that, since the Middle Ages, transit across the Alps has played an important role in history, and remains a key issue at a national and international level. Since the beginning of industrialisation the country has worked tirelessly to improve its transalpine network, beginning with the building of the Gotthard Rail Tunnel in 1882.

Today, construction of the New Rail Link through the Alps (NRLA) is creating a fast and efficient railway link with two tunnels under the Gotthard and Ceneri at its heart.

Crossing the Alps with minimal gradients and wide curves, the new railway link will stand at only 550 metres above sea level at its highest point.

The idea of a flat crossing of the Alps is nothing new, what with the first vision of a Gotthard base tunnel having been conceived in 1947, however it is the NRLA Gotthard Axis project, running from Altdorf in the north to Lugano in the south, that is creating the first flat route through the Alps. “Several key aspects characterise the AlpTransit project and differentiate it from other modern railway infrastructure

BE Monthly | 197

The Gotthard Base tunnel project The sheer scope and complexity of the project are literally unprecedented. No less daunting is the job of ensuring that railway employees, train operators and dispatchers can communicate with each other deep underneath 3,000 meters of Alpine granite.

To make that happen, Alcatel-Lucent Switzerland trusted one of the premier global RF solutions providers, CommScope®.

Project parameters and objectives As the in-tunnel DAS provider, CommScope engineers were asked to design, commission and provide system integration support for the DAS solution. The technical requirements were significant. Trains must be able to connect reliably and seamlessly to the railway’s railway’s GSM (GSM-R) network—the system that allows train operators, dispatchers and in-train personnel to communicate. The DAS must also support traffic from public GSM- 900MHz and GSM-1800MHz networks, one UMTS 2100MHz network and the railway’s PMR-400MHz public safety network. The objective was to ensure accurate, precise voice and data signal handoffs while trains speed through the tunnel at up to 250 kilometers per hour.

ION-M™—the high-speed railway coverage solution ION-M™ is the heart of CommScope’s DAS solution. It is a highly customizable, advanced multi-band, multi-operator, fiber-based DAS that uses master control units connected to multiple remote repeaters via fiber optic cables.

CommScope provides proven expertise and demonstrated success Through its Andrew Solutions railway connectivity portfolio, CommScope has built an impressive resume of successful high-speed rail projects. The first Andrew Solutions distributed antenna systems (DAS) for railway tunnels were developed in the 1980s for use in the construction of the Channel Tunnel—the world’s longest underwater passage, connecting England to France. Since then, CommScope has provided critical communication networks for rail projects in Italy, Taiwan, Spain, Switzerland, Canada, Russia, China and Norway.

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At times we can’t even get a strong enough cell phone signal in our own home. Imagine being asked to provide reliable, consistent signal strength for passengers speeding through the Swiss Alps at 250 kilometers per hour. That’s right, through the Alps, not over or around them.

In 1998, the Swiss government envisioned a high-speed rail line connecting the international trading hubs of Zurich, Switzerland and Milan, Italy. Only one thing stood in the way: The Swiss Alps. The solution was a 57-kilometer subterranean rail line blasted and bored through solid rock. When it opens in 2016, the Gotthard Base Tunnel will be the world’s longest railway tunnel.

projects,” explains Chief Construction completed with the Ceneri Base Tunnel.

Officer, Marco Ceriani, “for instance the The flat route will cut 40 kilometres off the fact that it will operate with mixed traffic. former distance of 330 kilometres from Basel Passenger trains will travel through to Chiasso and has a maximum gradient of the Gotthard Base Tunnel, which at 57 only 12 per thousand. That is much less than the 26 per thousand on kilometres will be the the 130-years-old existing world’s longest railway tunnel, at a maximum speed Gotthard mountain route. of 250 kilometres per hour “T he Gotthard Base and goods trains at up to Tunnel,” Ceriani continues, 160 kilometres per hour.” “consists of two single-track The Gotthard Base Tunnel tubes which are separated will go into operation in from each other but linked 2016, while three years every 325 metres by crossVisitors to the Alps each year later, in 2019, the flat route passages. In addition, two through the Alps will be mu lt i f unc t ion stat ions

100

million

Work in progress at Camorino, north of the north portal of the Ceneri Base Tunnel, includes the Lugano-Bellinzon

200 | BE Monthly

AlpTransit Gotthard AG

“It is the NRLA Gotthard Axis project, running from Altdorf in the north to Lugano in the south, that is creating the first flat route through the Alps” at Sedrun and Faido divide the tunnel tubes into three sections of approximately equal length. The multifunction stations each contain an emergency-stop station for evacuation and two track-crossovers, thus allowing trains to cross over from one tube into the other. The tunnel’s maximum capacity is 50-80 passenger

na viaduct and the new underpass of the cantonal road

trains and 220-260 goods trains per day, depending on the operating regime.”

Looking back over the history of the project itself, Ceriani is quick to highlight some of the larger, and indeed more challenging undertakings that have been encountered. “One of the biggest tasks was the construction of the shaft at Sedrun, which the miners began excavating in 1996.

They started from a mountain valley in the Bündner Oberland 1,300 metres above sea level and sank a shaft 800 metres down to the level of the tunnel. From this intermediate heading, they started driving the Gotthard Base Tunnel to the north and south. The purpose of the intermediate heading was to shorten the construction time.”

It perhaps goes without saying that the final breakthrough of the project also stands out prominently in Ceriani’s mind. “This took place in the east tube on 15 October, 2010, at 2:17 pm local time, when the tunnel-boring machine travelling from Faido broke through into the Sedrun section. The breakthrough error itself was minimal, measuring only eight centimetres horizontally and one centimetre vertically, yet it marked a historic moment for not only this project, but the country as well.”

Of course, with a project of this size challenges are difficulties are inevitable.

BE Monthly | 201

“What the newly constructed Gotthard route will do is make rail travel competitive with road and air travel�

In the Ceneri Base Tunnel at Sigirino, progress continues on four drives

202 | BE Monthly

AlpTransit Gotthard AG One of particular note occurred during work at the Piora syncline. It is here that on the surface by the road over the Lukmanier Pass, about 1,500 metres above the level of the tunnel, there are outcrops of whitish sugary dolomitic marble. The syncline itself was thought to consist of an inverted cone of loose aquiferous material extending down to a great depth. This zone was also encountered when a 6.5-kilometres-long exploration tunnel was drilled 300 metres above the The Amsteg installations site has been level of the base tunnel. removed and is now being renatured Ceriani goes on to recount what happened next. “Sugary dolomitic marble without dolomite under high water water was encountered. The geologists put forward the pressure flooded out and hypothesis that in the 300 blocked the tunnel-boring metres height difference machine with sand. The The total length of the whitish mixture of water and between the exploration Gotthard Base Tunnel sand flowed out of the tunnel tunnel and the base tunnel, and covered the cantonal there must be a geological discontinuity. It probably road in the Leventina with a sandy layer. The media reported this with takes the form of a solidified gypsum the headline “D-day at Piora Beach” and cap that separates these two different predicted the death of the project.” formations. The entire campaign cost This was not to be of course. “The point around 100 million Swiss francs. It was where the water flowed out was successfully executed before it was known whether sealed,” Ceriani highlights. “Diagonal bores this project could be implemented and the were drilled down to the level of the base financing had been secured. Ten years later, tunnel to investigate the consistency of when actually driving, this controversial the material. Fortunately, hard, compact zone was traversed without difficulty. At

57km

BE Monthly | 203

AlpTransit Gotthard AG

The points for the Sedrun multifunction station are assembled at Erstfeld before being transported into the tunnel

the level of the tunnel it was about 150 metres wide and was driven through at a speed of about ten metres per day.”

As of July 2013 structural work on the project is largely complete, with around 50 percent of the railway infrastructure systems within the Gotthard Base Tunnel having been installed. Meanwhile, in the Ceneri Base Tunnel, excavation work is in full swing, with more than 60 percent having already been cut, making AlpTransit Gotthard confident that the Ceneri Base Tunnel will be ready for scheduled train services in 2019.

Additionally, pilot operations between Faido and the south portal at Bodio will start on schedule in December 2013, making it a further important milestone on the way to the world’s longest railway tunnel becoming operational in 2016.

With strong progress being made across all areas of the project, Ceriani has a very clear view of what he expects it to bring Switzerland in terms of economic and social benefits. “Goods traffic on the north-south axis is constantly increasing and it is the goal for much of this traffic to be transferred from road to rail to protect the sensitive Alpine environment that we hold so dear. What the newly constructed Gotthard route will do is make rail travel competitive with road and air travel. This will benefit more than 20 million people in the catchment area between southern Germany and northern Italy.”

For more information about AlpTransit Gotthard AG visit: www.alptransit.ch

BE Monthly | 205

206 | BE Monthly

Waterfront Toronto

Looking over

the Lake

Toronto, Ontario’s capital and Canada’s largest city, looks across Lake Ontario but never made full use of its geographic advantage till Waterfront Toronto was created: the makeover will make the city more competitive as well as more beautiful

written by: John O’Hanlon research by: Adam Kalynuk

BE Monthly | 207

Waterfront Toronto

A

Aerial view of the Port Lands

great city facing a broad stretch of water: as a description this could apply to thousands of places because mankind usually makes its first settlement where it first makes landfall.

These settlements expand as trade makes use of the highways of the sea: hinterland cities are typically established later and take longer to grow.

Toronto developed that way. In the 19th century, with much of the city’s major trade historically boat-borne, having manufacturing facilities adjacent to the waterfront made good business sense.

Factories on the lakeshore allowed supplies to be easily received and finished products to be effectively transported. However, by the middle of that century, the lack of available land along the waterfront limited the growth of the shipping and industrial and railway infrastructure. So a massive campaign of lake filling was undertaken to expand the shore land. For the next hundred years, the shore was extended further and further south. The filling continued until the 1950s by which time the modern shoreline had been defined.

But the way it developed did not focus on the waterfront as an asset and it became cut off from the city centre and run down. In the 1970s people started to wake up to the fact that Lake Ontario could do for Toronto what Lake Michigan does for Chicago, or indeed the Laguna Veneta for Venice. But it was not until 1999 that Prime Minister Jean ChrĂŠtien, Premier Mike Harris and Mayor Mel Lastman announced the formation of a task force to develop a business plan and

BE Monthly | 209

• Coastal and Marine Engineering Services • Feasibility and Master Plan Studies • Shoreline Management • Numerical Modelling • Marina Design 1 416 487-4756 ext 222 Milo Sturm, Principal. msturm@shoreplan.com www.shoreplan.com

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Waterfront Toronto make recommendations for developing the waterfront as Shoreplan is a specialized coastal and marine engineering part of Toronto’s bid to host consulting firm offering expertise in shoreline management, the 2008 Summer Olympics. impact assessment of waterfront development, approval Toronto lost out to Beijing in process, marina design and the implementation the event but the waterfront of waterfront projects. Our services include site project progressed quickly investigations, feasibility and master planning studies, research, numerical modelling, expert testimony, detailed after that. design, preparation of construction drawings, project In 2001 the Canadian management and construction review. Our expertise government, the government extends to coasts, harbours, marinas, estuaries, rivers of Ontario and the City and canals. We are proud of our reputation for producing of Toronto established practical, functional and economically feasible designs for Waterfront Toronto (then our private and public sector clients.. known as the Toronto www.shoreplan.com Waterfront Revitalization Corporation) to oversee all aspects of the planning and development of Toronto’s central waterfront. The corporation’s Board of Directors began meeting in February 2002. In March, a small group of core staff was hired and an office set up. In April, the corporation hired a program manager, the Toronto Waterfront Joint Venture, to oversee implementation of waterfront projects.

John W Campbell joined the corporation as president and CEO in April 2003. In May of the same year, the provincial government enacted the Toronto Waterfront Revitalization Corporation Act, creating a permanent independent organization to oversee and lead

SHOREPLAN ENGINEERING LIMITED

$34 billion All-in cost of the programme.

Marilyn Bell Park

BE Monthly | 211

the renewal of Toronto’s waterfront, with a 25-year mandate to deliver.

Now, half way through, Waterfront Toronto and other government agencies have invested over $1.2 billion in capital projects. “These are revitalisation initiatives that the citizens of Toronto, Ontario and Canada will enjoy and benefit from for generations to come,” says Campbell. The cost of revitalising Toronto’s waterfront was originally estimated

(in 2001) at $17 billion, of which $4.3 billion would be funded from the public sector and the remaining $12.7 billion from the private sector. Due to escalation in construction costs, the cost of revitalization is now estimated to be over $34 billion. It really is one of the world’s largest urban renewal projects.

But far from being a drain on the city, the nation and the Province of Ontario all this expenditure has delivered real value for

“These are revitalisation initiatives that the citizens of Toronto, Ontario and Canada will enjoy and benefit from for generations to come” 212 | BE Monthly

Waterfront Toronto

Artist impression of Pan American Village

money, Campbell argues: “To date, our public investments have yielded more than twice their value in economic activity, generating $3.2-billion in output for the Canadian economy.” An economic study released recently also finds the $1.26 billion public investment over the past 12 years has generated about $620 million in government revenues, $36 million going to the City of Toronto. And the project is far from complete (if urban renewal can ever be said to be complete): “There are 44 recent or planned development projects on privately-owned lands across the waterfront and adjacent neighbourhoods,” he said. And that does not take into consideration the fact that the project has already created 9,700 full time years of employment.

John Campbell is keen to see that

Toronto becomes not only a more delightful place to live and work in as a result of the developments he is overseeing, but more effective and competitive as a city. To attract businesses into Toronto in this connected age it is essential to have the best access to communications technology, which is why he wants it to become known as an intelligent city. “The intelligent community concept is one of the things that can bring Canada back into a leadership position and drive our competitive stature around the world,” he says. “At the Waterfront we are building in an open access ultra high speed broadband system that will compete with any place in the world.”

With every home and business connected by fibre-optic technology the communities of

BE Monthly | 213

Canada’s Sugar Beach at night

Waterfront Toronto the Waterfront are promised affordable and unlimited access to Internet speeds up to 500 times faster than typical North American residential networks. Built and operated

by Toronto-based telecommunications firm Beanfield Metroconnect in partnership with Waterfront Toronto, the state-of-the-art network will deliver, at a competitive cost, internet connections starting at 100 megabits per second for residential customers and up to 10 gigabits per second for commercial customers. “We live in a time of acceleration,” says Campbell. “Cities that don’t adopt this kind of strategy are not standing still – they are dropping behind!”

While it isn’t possible to talk about all the innovative concepts the Waterfront will embrace, it is hard to resist either the name or the concept of a woonerf. A Dutch word meaning ‘living street’, a woonerf is a thoroughfare that gives priority to pedestrian, then bicycles, and finally vehicles that heed to use it for access. Everywhere they have been tried since their introduction in the 1970s woonerfs have slashed accidents. Cars are limited to a speed that does not disrupt other uses of the streets (usually defined to be pedestrian speed). Toronto is going to have two woonerfs, the first of which is already under construction in West Don Lands, an 80 acre former industrial site that is being turned into a sustainable, mixed-use, pedestrianfriendly, riverside community.

For more information about Waterfront Toronto visit: www.waterfrontoronto.ca

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shaping the future Maximising efficiency, increasing capacity and enhancing safety for the world’s premier resources companies

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ardno BEC is an Australian engineering consultancy providing professional electrical engineering services to the mining, utilities, materials handling, oil and gas, industrial and petrochemical sectors across Australia and around the world.

Through successful completion of projects throughout Australia, Africa, North and South America, Asia, Europe and the Pacific, Cardno BEC has proven itself a reliable and respected partner for many of the world’s premier Resource companies.

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With proven capabilities across all aspects of power generation, power systems, automation, control systems, ICT, plant integrity and project management, Cardno BEC’s differentiator is ‘applied expertise’.

Specialised teams provide clients with solutions that are underpinned by robust industry knowledge, indepth experience, innovation and technical excellence.

All projects are dependent on power system reliability and safety.

Cardno BEC has a Power Systems group dedicated to providing total engineering services for any network, be it for the resources, industrial or public utilities sectors. Cardno BEC will carry out all grid connection services for new plants as well as network planning for utility infrastructure upgrades.

Cardno BEC

When it comes to automation, Cardno BEC has the expertise to complete all aspects of automation whether for a new or existing plant, while its strong reputation as a process controls systems specialist results from its impressive track record.

Whether a client needs to increase its power capacity, maximise efficiency or design a complete project in the most remote location, Cardno BEC is able to deliver a design and management package or a turnkey solution.

In recent years Cardno BEC has undertaken a number of significant projects across Africa in countries including South Africa, Zambia, Cote D’Ivoire, Senegal, Burkina Faso,

Mauritania and Ghana. Collectively these projects demonstrate the depth of experience the company has with both greenfields and brownfields projects, where integration with the clients operations is seamless.

Cardno BEC has positioned itself as an engineering partner that exceeds client expectations.

Cardno BEC Pty Ltd Suite 1, Southgate Commercial Centre 87 Canning Hwy, South Perth, WA 6152 T : +61 8 9472 4224 www.bec-engineering.com.au

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reliability in transport

Kengas Group Limited started with bulk petroleum products and now provides supply and delivery services within the Great Lakes Region including Southern Sudan

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he Company has over 25 years’ experience and operates in some of the most demanding locations.

Bringing together the best minds and the best technologies, Kengas understands that having high standards is the driving factor of change in life. By bringing greater synergy to daily business, maximizing the efficiency of businesses and providing specialized services across countries, Kengas integrates continuous improvements to bring changes for the better. We aim to be the Regions leader in providing specialized services in remote environments based on sound success in the Oil Industry.

MISSION Efficiently and reliably provide services that: • Fuel the national economy • Improve the quality of life • C reate maximum value for

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Shareholders and stakeholders • Empower its employees CORPORATE VALUES Distinguishing characteristics of the business is the combination of Management experience, Service experience and Quality of service.

Kengas group treasures the following values in the people it employs: • Integrity • Teamwork • Communication • Achievement • Compassion and Understanding CORE VALUES Safety, Health & Environment - To operate its businesses safely and as good guardians of the environment. Comply with Environmental Regulations. HSE Stewardship will be every employee’s responsibility.

Integrity - Be honest and open with employees, customers and stakeholders.

Kengas Group

Respect - Trust, respect and value the opinions of all employees, customers and stakeholders as the critical component to teamwork and collaborative efforts.

Fairness - Reward employees on the basis of their performance and contribution to the organization.

• Recognize diversity as a key strength, the unique value of each employee.

• Foster an inclusive environment that will enable everybody to fully participate and contribute.

Competitiveness - Be competitive through efficient and reliable operations and superior customer service.

• Adopt best practices, seek innovation and share knowledge.

• Learn from its mistakes, from each other and from the best in the industry.

• Apply technology as a competitive advantage and steward its controllable costs.

Our Capabilities • Fuel Logistics and Supply • Cargo Logistics • Catering Services • Procurement • Camp designing, Construction and Management • Fleet management • ICT Services • Warehousing • Laundry Services • Consulting • Contract Logistics • Other specialized services

Kengas Group P.O. Box 3133 Nairobi, 00506, Kenya T +254 20 2225445 www.kengasgroup.com

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